The Inheritance Tax and welfare issues were of paramount importance to readers during our post-Budget 2025 live query and response session held last Wednesday. The session saw record engagement with over 300 that reached out for clear answers to numerous issues. This I did, alongside Beryl Power, PwC’s director of private client services.
The changes to the inheritance tax rules were foremost on people’s minds, validating the Government’s decision to commit to this issue for the first time in half a decade. The majority sought clarification on when the newly increased tax-free limits would be implemented. Some who are in the process of sorting out the matters of deceased relatives from previous months or even years wished to know whether they would benefit from such a change.
Following a late budget day vote in the Dáil, the new limits have been in effect since Wednesday, 2nd of October. Children can now inherit up to €400,000 in substantial gifts (anything over €3,000 per annum) and inheritances from a parent before they would need to consider tax. The exemption amount significantly reduces to €40,000 when the benefactor is a sibling, aunt, uncle, grandparent or great-grandparent, further dropping to €20,000 from anyone else, like in-laws or cousins.
Keeping in line with the standard procedure, the new thresholds will not apply retroactively. This implies if your relative passed away before the 2nd of October, the old thresholds will be applied when calculating tax obligations – €335,000, €32,500 or €16,250 depending on which of the previously mentioned categories any benefit falls under.
As for welfare, readers were interested in understanding precisely how much their specific payment would increase and when it would happen. January will be the key month for most readers.
Readers were also curious about the schedule for the lump sum and double weekly ‘bonus’ payments for individuals availing long-term welfare benefits.
Numerous one-time payments, particularly catered towards pensioners, are expected to be issued in November, with the bonus weekly payment due in October. The exact dates remain uncertain but are expected to be disclosed by Heather Humphreys, the Social Protection Minister, in the following weeks.
It has been noted with disappointment by expectant parents that unless a child is born before December, they will miss out on the two-fold child benefit payment available in November and December. Similarly, these parents will not be eligible for the newborn baby grant, which effectively triples child benefit payments, as this will only be applicable from 2025.
Questions have arisen following Paschal Donohoe, the Minister for Public Expenditure and Reform’s speech, which appeared to assure parents that funding for the National Childcare Scheme would increase by a further 44%, leading to a decrease in full-time childcare costs by an additional €1,100 for the coming year. However, his officials were later obliged to clarify that this funding was linked to a previous announcement, and there was, in fact, nothing in the recent budget to lower childcare costs.
Highlighted sectors also include the “mansion tax” with a 6% stamp duty rate on property purchases over €1.5 million. There’s doubt regarding whether the small benefit exemption, which permits employers to provide staff with up to €1,500 tax-free, will be implemented this year or in 2025. Budget documentation seems to indicate this will not commence until the next year.
Reader enquiries mainly pointed out missing elements in the budget rather than what was included. These include lacking an increase in income tax exemption limits for pensioners, medical card means test limits, a rise in the €3,000 small gift exemption and absence of new “green” initiatives like the expansion of the Bike 2 Work scheme or additional grants for electric vehicles or home renovations. However, there was a reduction in the VAT on heat pump installation from 23% to 9%.
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