For today’s younger generation, with rising costs and higher inflation, getting on the property ladder or paying for college can seem daunting. That’s why more and more parents, grandparents and wider family members are doing what they can to help.
Inheritance planning can be complicated, but preparing in advance helps reduce the tax burden for your loved ones and ensures you can pass on as much as possible. Setting up a savings plan is one way to make use of the annual Small Gift Exemption and gradually transfer wealth from your estate.
A Child Savings Plan is a unique savings plan which allows you to invest in our full range of investment funds. By saving through this plan and by assigning the plan to the child, you can make full use of the annual Gift Tax exemption of €3,000 from any one individual and €6000 for a couple.
Capital Acquisitions Tax
Capital Acquisitions Tax (CAT) is a tax you pay on gifts and inheritances. CAT is only due if the value of the gift or inheritance is above a set tax-free threshold and this threshold varies depending on your relationship to the person giving you the gift or inheritance.
Small Gift Exemption
The Small Gift Exemption allows a person to gift up to €3,000 a year to another person and it won’t attract a tax liability, nor will it reduce those tax-free amounts allowable on gift or inheritance tax. This means two people e.g., parents or grandparents, can gift a total of €6,000 every year to a child or grandchild tax free.
Child Saving Plan
The person providing the gift is known as the donor and the child receiving the gift is the donee or recipient. The Child Savings Plan is then set up in the following way, to ensure that the premiums paid are treated as gifts to the child. Benefit is payable to the child once the child reaches 18 or older.
