Favourite Niece/Nephew Relief

A. As your nephew will be receiving a gift of assets from his uncle this gift will fall into the Category B Threshold meaning your nephew can only receive €32,500 tax-free (assuming he has never received any inheritances/gifts previously). If the business assets gifted are valued higher than this he will pay tax at a rate of 33% on the excess over the threshold e.g. if the business was valued at €132,500 he would have a tax bill of €33,000

However, there is a relief from gift tax known as Favourite Nephew relief which can potentially relieve this burden in respect of business assets being gifted to your nephew.

If your nephew qualifies for the relief he can use the Group A tax-free threshold, usually granted to children of the person making the gift, of €310,000 in respect of any business assets received through a gift from their uncle.

Your nephew must have worked for you for the five years immediately before they receive the gift either:

for 15 hours per week in a small business (run by you and your spouse or civil partner)

or

for 24 hours per week in a larger business (that is, a business where there are other employees).

The relief applies only to assets used in the business.

It does not include investment assets which are taxed under normal rules.

Date published 24 Aug 2017

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.