Inheritance tax works differently in the UK and the Republic of Ireland. The UK charges the tax on the deceased person's estate at a standard rate of 40% above a tax-free threshold, while Ireland charges Capital Acquisitions Tax on each beneficiary at 33% above a threshold set by their relationship to the person who died.
That single difference, taxing the estate versus taxing the recipient, shapes almost everything else. This guide compares the two systems side by side for readers in England and Wales, using current published figures. All amounts are general information, not advice, and are subject to change.
The core difference: estate tax vs beneficiary tax
In the UK, inheritance tax is an estate tax. It is calculated on the total value of everything the person owned, and it is normally paid out of the estate before anything is distributed (gov.uk, as at August 2026, subject to change). Beneficiaries usually receive their share after the tax has been settled.
In Ireland, Capital Acquisitions Tax (CAT) is a beneficiary tax. Each person who receives a gift or inheritance is assessed on what they receive, and their tax-free threshold depends on how closely they were related to the person who died (revenue.ie, as at August 2026, subject to change). Two people inheriting equal shares of the same estate can face very different bills.
| Feature | UK (inheritance tax) | Ireland (CAT) |
|---|---|---|
| What is taxed | The estate of the deceased | Each beneficiary's gift or inheritance |
| Standard rate | 40% | 33% |
| Main tax-free band | £325,000 nil-rate band (plus residence band) | Group threshold by relationship (up to €400,000) |
| Spouse or civil partner | Exempt, no limit | Exempt, no limit |
| Reduced rate for charity | 36% where 10%+ of the net estate passes to charity | No equivalent reduced rate |
Sources: gov.uk/inheritance-tax and revenue.ie, as at August 2026, subject to change.
How UK inheritance tax works
UK inheritance tax is a tax across the whole United Kingdom, though the wider law of wills and probate differs between the nations. Everyone has a nil-rate band of £325,000, and there is an additional residence nil-rate band of up to £175,000 where a home passes to direct descendants such as children or grandchildren (gov.uk, as at August 2026, subject to change).
Combined, a single person leaving a home to direct descendants can pass on up to £500,000, and a married couple or civil partners up to £1,000,000, because unused bands can transfer to the survivor. The residence nil-rate band is reduced by £1 for every £2 by which the estate exceeds £2,000,000 (gov.uk, as at August 2026, subject to change). These thresholds are frozen until 5 April 2031 (gov.uk, as at August 2026, subject to change).
Lifetime gifts can fall outside the estate if the person survives seven years, and there is an annual gift exemption of £3,000 (gov.uk, as at August 2026, subject to change). From 6 April 2027, most unused pension funds and death benefits are also due to be brought within the value of the estate for inheritance tax, an announced change to be aware of (gov.uk, as at August 2026, subject to change). For a fuller picture, our guide to UK inheritance tax sets out the allowances in detail.
How Irish Capital Acquisitions Tax works
Ireland's CAT is charged at 33% on gifts and inheritances taken on or after 6 December 2012 (revenue.ie, as at August 2026, subject to change). Instead of one estate-wide band, each beneficiary has a lifetime tax-free threshold set by their relationship group. Tax applies only to value received above that threshold.
| CAT group | Relationship to the person who died | Tax-free threshold |
|---|---|---|
| Group A | Child (including certain foster and step relationships) | €400,000 |
| Group B | Sibling, niece, nephew, grandchild, parent | €40,000 |
| Group C | Any other relationship | €20,000 |
Source: revenue.ie, thresholds applying on or after 2 October 2024, as at August 2026, subject to change.
Gifts and inheritances between spouses or civil partners are fully exempt, with no limit (revenue.ie, as at August 2026, subject to change). There is also a small gift exemption of €3,000 per person per calendar year, which applies to gifts but not inheritances (revenue.ie, as at August 2026, subject to change). Notably, Ireland has no direct equivalent of the UK residence nil-rate band, and no reduced rate for charitable legacies.
A worked comparison (illustration only)
Estates that touch both countries
Families with assets or relatives on both sides of the Irish Sea can face both taxes on the same inheritance, because the UK generally taxes based on the deceased's domicile and location of assets, while Ireland can tax based on the residence of the person giving or receiving, or the location of Irish assets. A double taxation convention between the UK and Ireland exists to relieve inheritance tax being charged twice on the same property (gov.uk, as at August 2026, subject to change). Cross-border estates are genuinely complex, and taking advice in each jurisdiction is often worthwhile. Where a UK estate is involved, our overview of how probate works and how to write a will may be useful starting points.
A note on Scotland and Northern Ireland
UK inheritance tax applies across England, Wales, Scotland and Northern Ireland in the same way, because it is a UK-wide tax. What differs between the UK nations is succession law and the process after death. Scotland has its own rules, including legal rights for a spouse and children, and uses confirmation rather than a grant of probate. Northern Ireland has a separate but broadly similar system to England and Wales. The Republic of Ireland is an entirely separate country with its own CAT regime, described above.