Capital Acquisitions Tax Consolidation Act 2003 section 85

Exemption relating to retirement benefits

Section 85 exempts from capital acquisitions tax the inheritance of certain retirement funds by a child aged 21 or over, where the inherited fund is instead subject to income tax.

• Where a retirement fund passes on the death of a pensioner to a child of the pensioner (or of the pensioner's civil partner) who is aged 21 or over, the fund is fully exempt from capital acquisitions tax.
• Qualifying retirement funds include approved retirement funds (ARFs), vested Personal Retirement Savings Accounts (PRSAs), vested retirement annuity contracts (RACs), vested Pan-European Pension Products (PEPPs), and eligible balances in an auto-enrolment participant account under the Automatic Enrolment Retirement Savings System Act 2024.
• The fund must have been inherited under the will or intestacy of the disponer, and may consist of the disponer's accrued pension rights, accumulated income from those rights, or property representing such accumulations.
• Although the inheritance is exempt from CAT, the fund balance is subject to income tax at 30% under Case IV of Schedule D; if the child is under 21, normal CAT rules and thresholds apply instead.