Capital Acquisitions Tax Consolidation Act 2003 Section 72

Relief in respect of certain policies of insurance

Section 72 exempts the proceeds of certain life insurance policies taken out to cover inheritance tax liability, to the extent that such proceeds are applied in paying that tax.

• The proceeds of a qualifying insurance policy are exempt from inheritance tax insofar as those proceeds are used to pay relevant tax (inheritance tax and approved retirement fund tax) arising on or within one year of the death of the insured.
• A qualifying insurance policy must be in a form approved by Revenue, require annual premiums during the insured's life, and be expressly taken out for the purpose of paying the relevant tax.
• The relief extends to joint policies taken out by spouses or civil partners, covering tax payable on the death of the survivor, on simultaneous deaths, or where one spouse or civil partner does not survive the other by up to 31 days.
• Any part of the policy proceeds not applied in paying relevant tax is itself taxable as an inheritance, deemed to be taken on the later of the day after the insured's death or the latest date on which an inheritance giving rise to the relevant tax is taken.