Prior Gifts, Aggregation and the Small Gift Exemption
13 January 2022
Just a short reminder. We all know that we must aggregate prior gifts and inheritances going back to 5 December 1991. If there was a prior gift, the value of the gift should take into account the small gift exemption applying at the time. Historically, the SGE is as follows:-
- From 1 January 1978 to 31 December 1998 – €634.87 (IR£500)
- From 1 January 1999 to 31 December 2002 – €1270 (IR£1000)
- From 1 January 2003 to date €3000.
As you will be aware, and as the name suggests, the SGE only relates to gifts and not inheritances.
So, Mary dies in March 2021 leaving €10,000 to her niece John. John has received a gift of IR£10000 from his brother Tommy on the 10 July 2000. Then the calculation is as follows according to current rules.
- Threshold is €32,500
- Inheritance now is €10,000
- Add prior gift (IR£10,000 less IR£1000) = IR£9,000 = EUR11,427
- Total current inheritance and prior gift = €21,427 therefore no CAT liability of John.
It is the prior gift rules applicable at the time that the gift was given that applies when looking at your aggregation rules.
In addition, it is also worth knowing that while the current, say, class B threshold is €32,500. It is effectively €35,500 for gifts, because the first €3000 is exempt.
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