Recent changes introduced by the Finance Act, 2010 have simplified the payment of inheritance and gift tax and made the job of administering estates of deceased persons less onerous.

Liability for Payment of Gift & Inheritance Tax

Persons appointed to administer the estate of a deceased family or friend were often not aware that they, as executors, had a secondary liability to pay inheritance tax on assets left to beneficiaries. To deal with this secondary liability it was good practice for solicitors to ensure that any tax liability that arose was paid from the estate on behalf of beneficiaries.

However the Finance Act, 2010 has now simplified the rules as to who is an ‘accountable person’ i.e. the individual(s) who is assessable and liable for the tax. The Act provides that the person who receives the gift or inheritance is the accountable person. If the recipient passes away before tax is paid, the recipient’s personal representative will be liable. However the secondary liability for persons administering the estate has now been removed.

An exception to this general rule arises where one or more beneficiaries are non-resident. The Act provides that, where a non-resident beneficiary inherits property subject to Irish tax, then the Irish resident personal representative, and the solicitor instructed in the administration of the estate, shall be the accountable persons if the non-resident beneficiary does not pay his/her tax by the due date. However, if tax is payable on a current inheritance and a non-resident beneficiary, after reasonable enquiry, does not disclose a previous gift/inheritance, then the personal representative or the solicitor who has acted in good faith will not be accountable persons. Furthermore the personal representative and the solicitor are accountable for the non-resident beneficiary’s unpaid tax only to the extent of property which is reasonably within their control.

Payment of Gift & Inheritance Tax

The Finance Act 2010 also brings the payment of gift and inheritance tax into line with the payment of other taxes. Under previous rules, returns were due and tax payable usually within four months after the issuance of a grant of probate. The new rules provide that where this “due date” occurs during the period from 1 January to 31 August in any year, tax should be paid and a return delivered on or before 31 October in that year. In addition, where the due date occurs in the period from 1 September to 31 December in any year, tax should be paid and a return delivered by 31 October in the following year. If a return is delivered late, a surcharge will be payable. If the return is delivered not more that two months late of the due date, the surcharge is 5% of the amount of tax payable subject to a maximum of €12,695. If delivered after the expiration of two months from the due date, the surcharge is equal to 10% of the amount of tax, subject to a maximum of €63,485.

The Act also makes provision for the electronic filing of gift and inheritance tax returns through Revenue’s online service (ROS). However, where an individual is claiming a relief or an exemption from tax (other than the annual small gift exemption of €3,000 that can be received by an individual from an unlimited number of other persons) a paper return will have to be filed as currently required.

The Act also introduces changes to the amount which can be paid out by a bank from a joint account to the surviving account holder, the payment of CAT liability by instalments and the abolition of CAT as a statutory mortgage on property which was inherited or gifted and subsequently sold.


The Finance Act 2010 changes are to be welcomed in reducing the legal burden on executors and simplifying the making of tax returns. Overall the changes should help to modernise the gift/inheritance tax system and also bring it into line with the income tax and capital gains tax systems. However both executors, and unfortunately solicitors, must continue to be aware of their secondary liability to pay tax on Irish sited assets where those assets have been left to non-resident beneficiaries.