Significant support for families as further budget details are revealed

Families in the Irish heartlands are set to benefit from a cut in inheritance tax in the Budget.

Finance Minister Jack Chambers said on Thursday the tax was a “significant burden” on families.

And Social Protection Minister Heather Humphreys said there was likely to be a doubling of child benefit as the government raised expectations around the last budget before the general election. However, she also said there was likely to be no increase in Jobseeker’s Allowance.

Fine Gael has made cutting inheritance tax a key part of its budget and in recent weeks Deputy First Minister Micheál Martin and now Minister Chambers have expressed an interest in changing the inheritance tax rules.

The basic inheritance tax rate is currently 33% and applies to amounts above €335,000.

Senior Fine Gael figures have indicated they would be very surprised if some changes to the inheritance tax system were not included in this year’s Budget.

Now senior Government sources have confirmed that there will indeed be some change to inheritance tax in the Budget, which is due to be announced in October.

They said: “It’s definitely something that will be looked at closely. There are no hard numbers yet, it will be sorted out closer to budget day as they try to get the numbers to add up. But I would be surprised if there wasn’t some measure on this.”

They added: “Fine Gael and Fianna Fáil are supportive and want to do something about it. There is an opportunity to do something about it and there is a willingness to consider it. It could be €400,000 (pre-tax threshold) but it is too early to say.”

Mr Chambers said: “Inheritance tax and our capital gains tax are a significant burden on many families and, you know, there are special circumstances. I’ve heard some really difficult stories from families in recent years, particularly as property prices have risen. So that will be one aspect of the Budget that will be considered closer to the deadline.”

“But in the broader context, we need to make sure that this is consistent with what we have set out in our fiscal framework and that the decisions we make are sustainable and can be sustainable in the medium term.”

The Irish Daily Mail asked whether changing the way inheritance tax is paid makes sense.

Currently, this tax must be paid in one lump sum upon receipt of a gift, usually a house, resulting in many people having to sell their home to pay the tax.

The Mail newspaper suggested people would instead pay more income tax, or have it taken out of their wages in instalments each month, allowing them to keep their family home.

Mr Chambers said he had not considered that option but added it was an “interesting” proposition.

He commented: “When the Capital Acquisition Tax and thresholds were changed earlier, the property market in Ireland looked very different, with different house prices. This is a problem for many families in the Irish Midlands who have worked hard and want to leave something for the next generation, and many are faced with significant contributions following the death of a loved one.”

Referring to the proposal to change the method of paying the tax, he added: “Matters of a technical nature will be considered closer to the date of adoption of the budget.”

Tax strategy documents published last month indicate that raising the inheritance tax threshold from €335,000 to €400,000 will cost the state €50 million a year.

The documents note that it “may now be appropriate” to consider how inheritance tax could be “changed to simplify the system” and make it “more efficient for the taxpayer”.

The report also shows how much it would cost to change inheritance tax thresholds and rates.

Social Security Minister Ms Humphreys said pensioners, carers and disabled people should be prioritised in Budget 2025.

She added that the double child benefit paid over Christmas was “extremely popular” and that there were few people who did not need the benefit because costs such as groceries were still high.

The Minister said that because Ireland was still at full employment, she did not believe there was a policy justification for increasing welfare payments to the long-term unemployed.

She highlighted a recent change to Jobseekers’ Allowance, which means that people who lose their jobs will now receive a higher rate of benefit, linked to their wages.

“There are many job opportunities available to long-term unemployed people,” Ms Humphreys said.

She also added that increasing all social benefits by 20 euros would cost 1.5 billion euros.

“I think it’s important that we support people who can’t work in the budget,” she said.

“So some people with disabilities can’t work. Some people can, and we try to help them in that area as well, but generally speaking, people with severe disabilities can’t work.”

“People who care, provide services and help someone stay at home, often while unable to work.”

“Retirees, they’ve done their job. They’ve worked hard and now they’re retiring.”

Asked if there will be more lump sum payments, she said: “I think it’s important to remember that lump sum payments were introduced at a time when inflation was very high, and fortunately inflation has come down since then. But the cost of going to the supermarket is still high, groceries are expensive, and lump sum payments have proven to be very, very popular.”

Mr Chambers also said the 9 per cent VAT rate on electricity and gas was likely to be maintained.

He said: “The cost of living will be a central factor in how we budget for 2025. Part of that last year was the VAT cut on energy… So that will be taken into account in the context of Budget 2025.”

However, the minister refused to say the government intended to tax e-cigarettes in this year’s budget, indicating that there would be “progress” on the matter and that it was “likely” a tax would be introduced on them later in the year.

He added that work is ongoing on “details and technical issues.”