What is the status of grandchildren in relation to inheritance tax?

What is the status of grandchildren in relation to inheritance tax?

Mr D.Q., email

There are three different categories for inheritance tax:

Category A: From a parent to a child generally;

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Category B: From one linear relation to another – ie to a sibling, a grandchild or a niece or nephew;

Category C: Strangers – everyone else, including cousins, in-laws or friends.

The relevant current tax-free lifetime thresholds are: €310,000 (A); €32,500 (B); and €16,250 (C).

As you can see from that, grandchildren are generally in category B.

However, the minor children of deceased children – ie any grandchild you have under the age of 18 whose own parent is your child but has predeceased you – is treated as Category A and so is eligible for the higher €310,000 threshold.

Anything above those amounts, depending on the personal circumstances, is liable to tax at 33 per cent.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.