How can you give cash away tax free?

You might think, no problem, there is nothing stopping me.

And there isn’t.

But the person receiving the gift has to pay 1/3 of the gift as Capital Acquisitions Tax (CAT).

If you have often wondered how you can pass on some cash tax free to your children or others, then there is a way.

As you may know from previous news items, CAT is charged on any gift or inheritance to your children in excess of €335,000 at a rate of 33%.

One simple way of avoiding this CAT is to use the CAT small gift allowance which allows a €3,000 gift to be made CAT free from each donor.


Margot & John open a bank account for their daughter when she is born.

The 4 grandparents and the 2 parents lodge €18k per annum (€3,000 x 6) to the account.

€378k will be accumulated in the account CAT free by the time the child is 21.

The child still has €335k of a CAT threshold from her parents.

The CAT saving is €378k @ 33% = €125k. That’s a lot of cash that you wouldn’t have to pay to Revenue!

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