Financial Resolution No. 2: Capital Acquisitions Tax

Minister for Agriculture, Food and the Marine (Deputy Martin Heydon)

I move:

(1) THAT for the purposes of the taxes charged by virtue of the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of 2003), that Act be amended in the definition of "group threshold" in paragraph 1 of Part 1 of Schedule 2 to that Act—

(a) in subparagraph (a), by the substitution of "€420,000" for "€400,000",

(b) in subparagraph (b), by the substitution of "€44,000" for "€40,000", and

(2) THAT paragraph (1) of this Resolution shall apply in relation to a gift or inheritance taken on or after 7 October 2026.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

This resolution relates to capital acquisitions tax. It provides for increases to all three tax relief thresholds, which are referred to as group thresholds. Where a person receives a gift or inheritance that exceeds the relevant group threshold, a cap at a rate of 33% applies on the excess. The group A threshold relates to gifts and inheritance taken by children from their parents. The group B threshold covers gifts and inheritance received from other close relatives, such as siblings, uncles, aunts and grandparents. The group C threshold deals with gifts and inheritance between all other persons.

The resolution provides for the following increases to the three group thresholds: the group A threshold will increase from €400,000 to €420,000, an increase of €20,000; the group B threshold will increase from €40,000 to €44,000, an increase of €4,000; and the group C threshold will increase from €20,000 to €22,000, which is an increase of €2,000. The increased group thresholds will apply to gifts and inheritance taken on or after 7 October 2026. The increase in the amount of the group thresholds will cost an estimated €48 million per year.

Deputy David Cullinane

I have said many times that Fine Gael represents a cosseted, privileged class. Sometimes, I hope the party will prove me wrong but, of course, it always proves me right, and this resolution shows that. I do not know of many people who are looking for changes to inheritance tax. This measure is being introduced in a budget about which the Government had the brass neck to say it was a budget for workers, whereby 1.5 million workers in this State will receive a measly €5 a week as part of the big tax plan from the Government. Everybody on the Government side knows that €5 will be wiped out by increases in prices even before those workers get it.

The scandalous part about this resolution is that if a house is sold for €800,000 and two children benefit from it, they will not pay a single cent in inheritance tax.

What the Government is doing here is bringing in a proposal that will benefit 3% of the population. That is why I say that the Minister and the Government represent a cossetted, privileged class. I think people will be watching because this measure and other tax measures that the Government has put in place will cost €1 billion over the five years of the lifetime of the Government. Imagine what it could do with that €1 billion, how many houses it could build or how many additional healthcare staff it could employ. It could cut the cost of childcare to €10 a week – the Government promised to do that and, of course, it has not. There is so much that this Government could do with that €1 billion over five years, yet it is bringing in more tax reliefs and tax breaks for the wealthy and super-wealthy in this country. It really is shameful.

I hope those in the Government reflect on this budget. For the second year in a row, they have brought in a budget that has shafted the majority of workers and left them high and dry. They should be ashamed of themselves.

Deputy Ken O'Flynn

I disagree with the previous speaker. As somebody who is in a same-sex couple, I feel that there is a serious problem when it comes to inheritance tax. All that the Government has done is widen the gap. It has increased the tax band for the son or daughter by €20,000 and for the niece or nephew by €4,000. I listened to the previous speaker and his points, but we have to bear in mind that there are 300,000 couples in this country who are childless. These are not same-sex couples, but childless couples. There is something seriously wrong when you have bought your home, paid your tax on it and done everything right, yet you are told that while you can leave that property to an individual, it will eventually end up being sold. The reason it will end up being sold is that the inheritance tax is too big for a niece or nephew, while the person down the road who looked after you all your life cannot inherit that property. It is very unfair. I do not see a difference between a son or a daughter, a niece or a nephew or somebody who has looked after you and loved you all your life. To have inheritance bands come between individuals like that is deeply unfair.

It affects same-sex couples, as I said. It affects single men and single women who did not get married, either by choice or because life took them in a different direction. It penalises them. Let us bear in mind that these are people who have paid their property tax, have paid tax on purchase and have been doing everything right, and they want to leave something behind them. The previous speaker talks about millionaires, billionaires and the rest of it, but this affects a lot of people. I know of people in my constituency who inherited a small house from an uncle or an aunt. A lot of them are on the housing list, believe it or not. A lot of them were saying that this was great, and that they could go into this house that belonged to their aunt, grand-aunt, uncle, great-grandfather or whatever, but they ended up having to sell it because the tax burden was too big for them. We need to look at this again. We need to be fair. We need to look at equality.

I am incredibly disappointed that the Government has not listened to the EDIT campaign, which has been very proactive. James Sexton and the entire group have been incredibly proactive in talking to every TD and party in this House and in highlighting those facts. It is incredibly disappointing. I think the previous speaker’s points were incredibly disingenuous when it comes to those who want to pass on something to loved ones or those who took care of them all their lives.

Deputy Michael Fitzmaurice

As was outlined earlier, every one of us, as public representatives, regardless of party, has been approached in recent years in relation to people who never got married, those who have no family and same-sex couples. There is a frustration out there that they are not being treated equally. There is nothing wrong with trying to give a house or whatever else to a brother or sister. I know that on the land side, having to prove a thing called the favourite niece or nephew is pretty tough going. We need to listen. As was outlined earlier, there are 300,000 people who do not have a next generation, and they want to help their nieces or nephews, who may not have a house, to get onto the housing ladder. We should be listening to them.

When we look at the figures, equality does not come into it, to be frank. It is balanced the wrong way, when it should be equal. It should be looked at again, as the previous speaker said.

Deputy Paul Murphy

The major inequality here comes from the fact that a small number of people have parents, loved ones or whoever else passing on major inheritances to trigger the inheritance tax. It is a very small number of people. Most people do not get that. Only a third of people get any substantial inheritance whatsoever in the course of their entire lifetime. The average inheritance that people get is about €100,000. Just 3% of people are getting something that would trigger these taxes. Therefore, what the Government is proposing, after a massive increase in inheritance tax previously, from €350,000 to €400,000, is to spend more public money on what will benefit a very small section of the population. It is 3% of the population. It is the most well-off, most comfortable people who will benefit from this tax change at a time when the majority of people are struggling with the cost-of-living crisis, and when 40% of parents say they have to cut back so their kids can have enough to eat. That 40% and their kids are not impacted by inheritance tax. Our priority is ensuring that those people are not suffering from the cost-of-living crisis.

Something important that is often missed in discussions around inheritance tax is that if someone is passing on a farm or business, that is written down by 90%, which means that a €420,000 limit before any tax applies turns into a €4.2 million limit before any tax applies. Therefore, wealthy families are able to pass on enormous amounts of wealth to their children before they pay any tax whatsoever, and after that €4.2 million, they would only pay a 3.3% tax because the bit over the threshold is also reduced by 90%. This is a major cause of intergenerational inequality - the ability of rich people to set their kids up for life in a way that most people do not get access to. Our priority in spending should be on education, healthcare and cost-of-living supports to ensure that everybody, regardless of their parents' position in life, gets an equal chance in this society.

Deputy Richard O'Donoghue

I have been listening to speakers saying that only 3% of people will benefit from this. If it was only 1%, and they could help others by helping themselves to something left to them by an uncle or aunt, why would they not help somebody? If Deputy Murphy looked at his own situation, fewer than 1% of the people in this country even know who he is. Why would he not help people outside of himself? For God’s sake, he talks about 1%. Did he not see the fuel crisis recently? How many people were on the road trying to feed him? How many of those people are struggling to keep going? I listened to the waffle from that person about how 3% of people in this country will benefit.

Deputy Paul Murphy

It is true.

Deputy Richard O'Donoghue

If I could help somebody - if I was an uncle or an aunt, or if somebody had looked after me all my life and helped me - I would.

The cost of building has inflated from €120 a square foot to €220 a square foot. It has gone up that much, and the Deputy is worried about inheritance tax going up a small bit when the cost of building has gone up by €80 a square foot in five years. He should listen to himself - this has not even moved. Anyone who has helped anyone in this world to keep their farm or household going so they can help others should be supported.

I would be delighted to help - even if it was only 1% - because when those people are in a better situation with a roof over their heads, they might then be in a situation to put a roof over somebody else's head. I have no issue with this.

Deputy Michael Collins

In relation to the inheritance tax, there is inequality here that is not being address properly. A lot of promises were made or there were a lot soundings to the effect that this would be delivered on. That is not happening. I have listened to people from all sectors of society here in the Dáil. I know people who may have a lot of farm property but who are seriously in debt. That is not taken into account at all. There is an assumption that when people have something, they must get rid of it by selling it and spread the money around the world. What about the hard-working man and woman? The problem we have with inheritance tax is that the people who are giving something most likely overpaid their taxes to buy the properties they own. They paid their taxes in order to build those properties. I am 99% sure that they did. They have worked their butts off and have paid bloody taxes for long enough. What does the Government do? It hits them. Whether they are in a same-sex marriage or whatever does not matter. When they want to pass it along, the Government wants to hit them again. There is no relief for the people in situations where they are slightly outside what the Government wants to understand. The bottom line is that this needs to be looked at again. I am pleading with the Minister to look at it again and to give everybody a chance. He should be open about it and think of the men and women who have worked all their lives, who paid their taxes, who bought properties and who are now being hit again. It is not fair. It will not work.

Deputy Michael Healy-Rae

I have heard people saying that the Minister is for the privileged classes and so on, but that is rubbish talk. I warmly welcome these changes. There are people in this House who do not understand that if someone inherits farmland, that land might be worth a lot of money on paper, but all it is worth is what the person can work hard at to make a living out of it. It is not as if the person is going to be inheriting the land, selling it and then going off to the Bahamas with the money or any nonsense like that. All the person is going to do is take that land and use it as a vehicle to make a living for the rest of his or her life. For somebody to accuse the Minister of being for the privileged classes is rubbish talk. That type of talk comes from people who do not understand what farming is about. On paper, land might look like it is worth something. Unless the person involved sells it and realises the asset, however, all he or she is inheriting is a way to make a living.

In the context of future budgets, I want to talk about something Deputy Kyne referred to. I want to speak about a particular campaign and thank the Sexton family and others who have continually highlighted a very simple thing that we should all be very much taking into our hearts and souls. People who get married or who do not and who do not produce children of their own and do not have direct heirs work very hard. They might have their own house or a second house or a farm. When they eventually pass on, their asset is devalued so much because whoever they leave it to will have to pay so much inheritance tax. I know that everything cannot be done at the same time, but I very much hope that in the future we will be able to look at those categories of people and do something more to help them. They are taxpayers. They have worked hard, achieved and built up an asset, and just because God did not give them children, they do not have somebody to pass it on to directly. They know that their work and their life efforts are going to be so devalued by leaving the asset to the preferred niece or the neighbour's child, somebody who was nice and who was good to them but who might not be their direct heir. They will not be able to benefit from any reliefs. In future, we have to try to think of those individuals. People who are attacking what is proposed and saying that it is about wealth, property or money are engaging in rubbish talk. This is about people who work hard. In terms of the land, one can give one's life to it. Someone may be lucky enough to inherit a farm and may want to pass it on again. He or she will work hard to make it better and pass it on. Any way that we can relieve the burden of tax that those who inherit would have to pay has to be very warmly welcomed by normal thinking and normal working people and by people who appreciate those who get up, go out to work and try to save up and improve things.

Deputy Rory Hearne

There has been a lot of giving out about this by previous speakers from the angle of inequality and the issue of privilege. A lot of it is a complete misunderstanding or a purposeful misunderstanding of the points that were made earlier by Deputy Cullinane. What this means is that there will be no tax charged on an inheritance of €420,000. That is a significant amount of money when there are people in this country who literally cannot afford to put food on the table. This is not about people who are vulnerable or struggling. It is about people who will be inheriting a significant amount of money. When we look at wealth inequality in this country, the richest 10% own 50% of net wealth, while the bottom 50% own just 10%. We have a wealth inequality problem, and Fianna Fáil and Fine Gael have stood up for privileged groups, including developers, investor funds and so on. On their watch in government, wealth inequality has grown. What are the people who are homeless, namely the generation who cannot afford to buy a home or own anything, to think when the Government is giving money away to people who will already make significant amounts from inheritances and saying that it cannot afford to put more money into affordable housing?

Deputy Ged Nash

This issue has attracted a considerable amount of political attention and time in this House and elsewhere over the recent period. The time and attention it has received is disproportionate to the problem that the Minister seems to want to resolve, if it is a problem at all. I am one of those people who is married and who does not have children.

The Dáil divided: Tá, 96; Níl, 65; Staon, 0.

Tá

Aird, William.
Ardagh, Catherine.
Boland, Grace.
Brabazon, Tom.
Brennan, Brian.
Brennan, Shay.
Brophy, Colm.
Browne, James.
Burke, Colm.
Burke, Peter.
Butler, Mary.
Butterly, Paula.
Buttimer, Jerry.
Byrne, Malcolm.
Cahill, Michael.
Callaghan, Catherine.
Calleary, Dara.
Canney, Seán.
Carrigy, Micheál.
Cleere, Peter 'Chap'.
Clendennen, John.
Collins, Michael.
Collins, Niall.
Connolly, John.
Cooney, Joe.
Crowe, Cathal.
Cummins, John.
Currie, Emer.
Daly, Martin.
Dempsey, Aisling.
Devlin, Cormac.
Dillon, Alan.
Dolan, Albert.
Dooley, Timmy.
Feighan, Frankie.
Fitzmaurice, Michael.
Fleming, Sean.
Foley, Norma.
Gallagher, Pat the Cope.
Geoghegan, James.
Grealish, Noel.
Harkin, Marian.
Healy-Rae, Danny.
Healy-Rae, Michael.
Heneghan, Barry.
Heydon, Martin.
Higgins, Emer.
Keogh, Keira.
Kyne, Seán.
Lahart, John.
Lawless, James.
Lawless, Paul.
Lowry, Michael.
Maxwell, David.
McAuliffe, Paul.
McCarthy, Noel.
McConalogue, Charlie.
McCormack, Tony.
McEntee, Helen.
McGrath, Mattie.
McGrath, Séamus.
McGreehan, Erin.
Moran, Kevin Boxer.
Moynihan, Aindrias.
Moynihan, Michael.
Moynihan, Shane.
Murnane O'Connor, Jennifer.
Murphy, Michael.
Naughton, Hildegarde.
Neville, Joe.
Nolan, Carol.
O'Brien, Darragh.
O'Callaghan, Jim.
O'Connell, Maeve.
O'Connor, James.
O'Donnell, Kieran.
O'Donoghue, Richard.
O'Donovan, Patrick.
O'Flynn, Ken.
O'Meara, Ryan.
O'Shea, John Paul.
O'Sullivan, Christopher.
O'Sullivan, Pádraig.
Ó Cearúil, Naoise.
Ó Fearghaíl, Seán.
Ó Muirí, Naoise.
Richmond, Neale.
Roche, Peter.
Scanlon, Eamon.
Smith, Brendan.
Smyth, Niamh.
Timmins, Edward.
Toole, Gillian.
Tóibín, Peadar.
Troy, Robert.
Ward, Barry.

Níl

Ahern, Ciarán.
Bacik, Ivana.
Bennett, Cathy.
Boyd Barrett, Richard.
Brady, John.
Buckley, Pat.
Byrne, Joanna.
Carthy, Matt.
Clarke, Sorca.
Conway-Walsh, Rose.
Cronin, Réada.
Crowe, Seán.
Cullinane, David.
Cummins, Jen.
Daly, Pa.
Devine, Máire.
Donnelly, Paul.
Ellis, Dessie.
Ennis, Daniel.
Farrelly, Aidan.
Gannon, Gary.
Gibney, Sinéad.
Gogarty, Paul Nicholas.
Gould, Thomas.
Graves, Ann.
Guirke, Johnny.
Hayes, Eoin.
Healy, Seamus.
Hearne, Rory.
Kelly, Alan.
Kenny, Eoghan.
Kenny, Martin.
Kerrane, Claire.
Lawlor, George.
Mac Lochlainn, Pádraig.
McDonald, Mary Lou.
McGettigan, Donna.
McGuinness, Conor D.
Murphy, Paul.
Mythen, Johnny.
Nash, Ged.
Newsome Drennan, Natasha.
Ní Raghallaigh, Shónagh.
O'Callaghan, Cian.
O'Donoghue, Robert.
O'Gorman, Roderic.
O'Hara, Louis.
O'Reilly, Louise.
O'Rourke, Darren.
Ó Broin, Eoin.
Ó Laoghaire, Donnchadh.
Ó Murchú, Ruairí.
Ó Snodaigh, Aengus.
Ó Súilleabháin, Fionntán.
Quaide, Liam.
Quinlivan, Maurice.
Rice, Pádraig.
Sheehan, Conor.
Sherlock, Marie.
Smith, Duncan.
Stanley, Brian.
Wall, Mark.
Ward, Charles.
Ward, Mark.
Whitmore, Jennifer.

Staon

Tellers: Tá, Deputies Mary Butler and Emer Currie; Níl, Deputies Rory Hearne and Ged Nash.

Question declared carried.

Dáil Éireann debate -
Tuesday, 6 Oct 2026