Most comparisons online still quote superseded UK figures, and few explain the structural gap: UK inheritance tax is a one-off charge on the estate, while Irish CAT is a running total kept against each beneficiary across their lifetime. That difference, not the headline rate, decides who ends up with a bill. This guide is general information for England and Wales, not advice.
What is the difference between inheritance tax in the UK and Ireland?
| Feature | United Kingdom (IHT) | Ireland (CAT) |
|---|---|---|
| Who pays | The estate, via executors | The beneficiary who inherits |
| Headline rate | 40% (36% if 10%+ to charity) | 33% |
| Tax-free allowance | £325,000 nil-rate band, plus up to £175,000 residence band | Group A €400,000, Group B €40,000, Group C €20,000 (lifetime) |
| How the allowance works | Per estate, at death | Per beneficiary, cumulative over a lifetime |
| Valuation point | Date of death | The valuation date, often the grant of representation |
| Spouse or civil partner | Exempt | Exempt |
| Lifetime gifts | Free after 7 years (taper applies) | Counted against the lifetime threshold, no 7-year escape |
Source: gov.uk, Inheritance Tax and Revenue.ie, CAT thresholds, as at August 2026, subject to change.
Who pays the tax, the estate or the person who inherits?
This is the change most people miss. UK inheritance tax is worked out once, on the whole estate, and the executors handle it (how UK inheritance tax works). Where an estate is under the threshold, no one pays anything.
Irish CAT is personal to each beneficiary. A child inheriting €500,000 uses the €400,000 Group A threshold; a niece inheriting the same amount only has the €40,000 Group B threshold, so she pays far more on an identical inheritance. Each beneficiary files and settles their own bill.
Source: Revenue.ie, IT38 returns, as at August 2026, subject to change.
How do the thresholds and rates compare?
UK bands are frozen until 5 April 2031, extended at the 2025 Budget on 26 November 2025. The residence nil-rate band is withdrawn by £1 for every £2 an estate exceeds £2,000,000, so it tapers away on larger estates. Farm and business assets keep 100% relief on the first £2,500,000 combined per person from 6 April 2026, transferable to £5,000,000 per couple, and 50% above (the 2025 Budget changes in full).
| Allowance | UK | Ireland |
|---|---|---|
| Standard band | £325,000 nil-rate band | €400,000 to a child (Group A) |
| Home to children | Up to £175,000 residence band | Dwelling house exemption, on strict conditions |
| Sibling, niece, nephew | Same £325,000 band | €40,000 (Group B) |
| Everyone else | Same £325,000 band | €20,000 (Group C) |
| Rate above the allowance | 40% | 33% |
Source: gov.uk, Inheritance Tax and Revenue.ie, CAT groups, as at August 2026, subject to change. A £325,000 band is roughly €375,000 depending on the exchange rate.
Worked example: how the same estate is taxed in each country
The figures below assume the child did not live in the home, so the UK residence band applies but the Irish dwelling house exemption does not. They ignore exchange-rate movement and any earlier gifts. They are an illustration, not a calculation for a real estate.
| Step | United Kingdom | Ireland |
|---|---|---|
| Estate or inheritance | £600,000 | €700,000 |
| Allowance | £325,000 + £175,000 = £500,000 | €400,000 (Group A) |
| Taxable amount | £100,000 | €300,000 |
| Rate | 40% | 33% |
| Tax due | £40,000 | €99,000 |
| Who settles it | The estate | The child |
The Irish bill is larger here because a single child gets one €400,000 threshold, while the UK stacks a £325,000 band on top of a £175,000 home allowance. Reverse the relationship, say a childless person leaving £600,000 to a nephew, and the gap widens further: the UK still allows £325,000, but Ireland allows only €40,000, so almost the whole inheritance is taxed at 33%.
Source: rates and bands from gov.uk and Revenue.ie, as at August 2026, subject to change.
How do gifts and the 7-year rule differ?
The UK also gives an annual £3,000 gift exemption, £250 small gifts to any number of people, and normal exemptions for wedding gifts and gifts from surplus income. Give more than that and survive seven years, and the gift usually drops out of the estate.
Ireland aggregates. Gifts and inheritances a person receives within the same group since December 1991 are added together against their threshold, so there is no clean reset. Ireland does allow a €3,000 small gift exemption per giver each year, which sits outside the running total (how gift exemptions work in the UK).
Source: gov.uk, gifts and Inheritance Tax and Revenue.ie, small gift exemption, as at August 2026, subject to change.
What happens if you inherit across the UK-Ireland border?
- Identify where each asset is located. UK property is generally within the scope of UK inheritance tax; Irish-situated assets fall within Irish CAT.
- Check domicile and residence. A person UK-domiciled is usually within UK IHT on worldwide assets, while Irish CAT can apply where the giver or receiver is Irish-resident, so both taxes can be triggered by one estate.
- Apply the convention. Where both taxes hit the same asset, credit relief under the UK-Ireland convention reduces the double charge, giving credit for the tax already paid on that asset.
- Take cross-border advice. Situs, domicile and the interaction of two tax systems are technical, so most people in this position use a solicitor or tax adviser qualified in both countries.
If your estate touches both countries, it is worth folding the comparison into your wider estate planning early, rather than leaving executors to reconcile two tax systems later.
Source: Revenue.ie, double taxation relief (UK), as at August 2026, subject to change.
Frequently asked questions
Is inheritance tax higher in Ireland or the UK?
The UK headline rate of 40% is higher than Ireland's 33%, but the tax that falls on a family depends on the allowances and who pays. A UK couple can pass up to £1m where a home goes to children, while an Irish child gets a €400,000 lifetime threshold and pays personally, so a modest estate can create a larger bill in Ireland for a distant relative than in the UK.
Do I pay UK inheritance tax on money inherited from Ireland?
UK inheritance tax is charged on the estate, not usually on the person receiving a gift, so a UK resident inheriting from an Irish estate does not normally pay UK inheritance tax on the money received. Irish CAT may apply instead, and other UK taxes such as income tax on what you do with the money afterwards can arise. Cross-border cases turn on domicile and where assets sit, so advice is sensible.
How much can a child inherit tax free in Ireland?
A child can inherit up to €400,000 tax free from a parent under the Group A threshold, as at August 2026. This is a lifetime figure covering gifts and inheritances from parents since December 1991, not a fresh allowance for each inheritance. Anything above it is taxed at 33% (Revenue.ie, subject to change).
Is there a double taxation agreement between the UK and Ireland?
Yes. A UK-Ireland convention covers UK inheritance tax and Irish Capital Acquisitions Tax, so the same asset is not taxed twice in full. Ireland gives credit for UK tax paid on UK property, limited to the Irish tax on that asset. It applies only where identical property is taxed in both countries on the same event.