Single people have no platform unlike married couples, same sex civil partners, people with disabilities, the LGBT community, Travellers or farmers when it comes to our tax laws. The same sex marriage of friends Matt Murphy (83) and Michael O’Sullivan (58) in Dublin last month to avoid paying €50,000 in inheritance tax highlights the issue single people face.

Inheritance Tax: Friends Matt Murphy and Michael O’Sullivan married in December 2017 to avoid paying €50,000 inheritance tax.

Tying the knot is not necessarily a solution for single people. Inheritance tax thresholds need to be examined as they are contravening civil and human rights the way they are at present.  

There is a submission currently in the Law Reform commission for consideration with the view to changing the law and an online petition began in October 2017.

Irish Inheritance Tax: The law favours couples over singletons 

On the basis of fairness alone the Revenue categories that exist for inheritance purposes need to be revised and changed. Those unrelated persons who inherit from single childless people pay considerably more tax than if they inherit or benefit from a spouse, civil partner or blood relative.

Group A: tax free threshold €310,000 – applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
Group B: tax free threshold €32,500 – applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant.
Group C: tax free threshold €16,250 – applies in all other cases.

This is discrimination. It is a right and choice not to marry, not to be in a same sex partnership, not to co-habit, and not to have children. Exercising this right leaves single people out on a limb and in jeopardy in terms of devaluing their estates and denying the right to continuity in the community.

Inheritance Tax: Wills can bring untold stress once it’s revealed how much tax a singleton must pay

Single people in order to avail of the same tax privileges as those in category A and B should be entitled to nominate a beneficiary/beneficiaries who would have the same benefit as others in category A and B.

Now the same sex individuals in civil partnerships and marriages have the same rights and privileges as married people, single people are marginalized and are subsidizing other groups in terms of revenue gathering.  

This is a sore topic for many single people and one that really comes to light only after it happens or when it needs to be done like making a will. Often the implications of so doing are sometimes lost. I refer all the time to non blood relatives who are beneficiaries.

Inheritance Tax: How to pay the inheritance tax becomes a big issue for the single person

An inheritance can become a burden and indeed in some cases can cause untold stress and worry. How do you pay the tax when you don’t have the cash?  Do you dispose of the benefit in order to pay the tax? This causes a breakdown of community when property has to be sold on the open market to an unconnected party.

The burden to resolve and pay the exorbitant/ punitive amount of tax is another concern especially if already financially stretched or exposed and possibly emotionally vulnerable in the aftermath of the death of a loved one, even if not related by blood.

Often the differences and disagreements that arise in such a settlement can escalate and mount into disputes that are hard to resolve let alone repair. If a single person is dealing with this stress alone it adds further pressure.

Court proceedings or raising the cash to pay the tax can put salt in the wounds. Often a loan cannot be summoned from any source for such a payment to be made to Revenue. Insurance for the likely beneficiary can be got however this is another expense which in many cases is prohibitive do the cost and other administrative stipulations. Litigation can serve to drive a wedge and cause deep and lasting rifts between friends and family.

Inheritance Tax: Crunching the numbers reveals the penalties if you are single

A related issue is the benefit contributory pension, again a different deal for singles from marrieds and same sex partners. The same amount is paid over the working life time by both the singleton and the partnered yet after the death the pension or a percentage of it in the case of the ‘partnered’ is passed on to the spouse and children. A single person is denied this possibility.

For many the realization of the unfairness comes too late; death, illness, grief, penalties. If a singleton leaves an estate to another single person (non blood relative) the beneficiary pays the price. Many of us are uneasy to speak about inheritance and wills which contrives to benefit the state.

After all being single and childless is a choice and a right. Single individuals should have the right to nominate beneficiaries who can have the same preferential benefits as the family enjoy. The upshot of the existing law is that Category Cs are really cash cows who subsidize the rest. So much for equalization. I believe the law needs to be changed.

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