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;
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.
