Tax Planning · Ireland
Section 72 & Section 73 — Reducing Inheritance Tax in Ireland
Inheritance tax can force families to sell a home, a farm or a business just to pay the bill. Two Revenue-approved plans — Section 72 life assurance and Section 73 savings plans — let you plan ahead so your loved ones keep what you leave them. Here is how each one works, who it suits, and how we set them up.
Last reviewed by Debbie Cheevers, QFA, RPA · 30 June 2026
What is Capital Acquisitions Tax (CAT)?
Inheritance tax in Ireland is officially called Capital Acquisitions Tax (CAT). It is charged when someone receives a gift, an inheritance, or certain benefits from a trust. It is administered by the Revenue Commissioners and is charged at a flat rate on anything above your tax-free threshold.
- Group C (everyone else) has a threshold of €20,000, and thresholds are lifetime totals for gifts and inheritances within the same group.
- Tax is generally payable within months of the inheritance — which can create real liquidity pressure if the assets can’t easily be sold.
- This is where structured planning with a Section 72 or Section 73 policy becomes valuable.
Section 72 Life Assurance — how it works
Section 72 of the Capital Acquisitions Tax Consolidation Act 2003 lets you take out a qualifying whole-of-life policy, the proceeds of which are used to pay the CAT bill. Set up correctly, the payout itself is exempt and does not add to the tax liability.
- 1
Estimate the exposure
We work out the likely CAT bill your family would face on your estate.
- 2
Take out a qualifying policy
You put a Revenue-approved whole-of-life policy in place, in the correct wording.
- 3
Pay premiums during your lifetime
Premiums are paid by you while you are alive, as the rules require.
- 4
The payout covers the CAT
On death, the policy pays a tax-efficient lump sum that is used to pay the CAT bill — so no assets need to be sold.
When it suits
- Parents leaving property to children
- Families with investment portfolios
- Business owners passing on shares
- Anyone with rising asset values
Advantages
- Guarantees a tax-efficient lump sum
- No investment risk
- Simple structure when set up right
- Beneficiaries don’t have to sell assets
Things to weigh
- Premium cost rises with age
- Correct policy wording is essential
- Proceeds must be used to pay CAT to qualify
Section 72 vs Section 73 — key differences
| Feature | Section 72 | Section 73 |
|---|---|---|
| Trigger | Death | Policy maturity (min. 8 years) |
| Structure | Whole-of-life insurance | Investment savings plan |
| Risk | Low (insurance based) | Market risk applies |
| Purpose | Cover tax on death | Pre-fund a future gift tax bill |
| Suits | Immediate protection | Long-term planners |
Section 73 Savings Plan — how it works
A Section 73 plan is an investment-based life assurance savings plan that builds up a fund over time to meet a future gift tax bill. Unlike Section 72, it is not triggered by death — it is designed for passing assets on during your lifetime.
The key requirements
- The plan must run for at least 8 years from inception before relief applies
- Proceeds must be used within 12 months to pay gift tax on a lifetime gift
- It must satisfy Revenue’s conditions under Section 73
- Any unused proceeds are treated as a taxable gift
When it suits
- People planning well in advance
- Parents with a predictable future liability
- Those comfortable with some investment risk
- Anyone who prefers a structured savings approach
Worked examples: managing CAT pressure
Protecting the family home
Situation: John and Mary, both in their 60s, own a home worth €900,000 and want to leave it to their two children.
The tax: Each child still has their full €400,000 Group A threshold, so the potential CAT is modest — but it still needs funding.
The plan: A joint-life, second-death Section 72 policy with a €100,000 sum assured covers the bill, so the home passes on intact.
Transferring a family business
Situation: John owns a €3,000,000 company he plans to leave to his nephew.
The tax: After 90% Business Relief, €300,000 is taxable. Less the €40,000 Group B threshold, €260,000 is taxed at 33% — about €85,800.
The plan: A Section 72 whole-of-life policy provides the lump sum, so the nephew does not have to sell shares or borrow.
Gifting a property (Section 73)
Situation: Mary wants to gift her daughter Sinéad a second property worth €250,000, but Sinéad’s threshold is already used.
The tax: The full €250,000 is taxable — a CAT bill of €82,500.
The plan: A Section 73 plan (€60,000 up front plus €2,500 a year for 8 years) pays the €82,500, and is not treated as a further gift — avoiding an extra €27,225.
Figures are illustrative and based on 2026 CAT thresholds and the 33% rate. Business Relief can reduce the taxable value of qualifying business assets by 90% where the conditions are met.
Common mistakes that can invalidate relief
Revenue relief is conditional, and small errors can be costly. The ones we see most often:
- Incorrect policy wording
- Assigning ownership of the policy improperly
- Not using the proceeds to pay CAT
- Failing the 8-year requirement on a Section 73 plan
- Not reviewing thresholds as the law changes
Because the rules are technical, these arrangements should always be set up and reviewed with professional advice, alongside your wider estate plan and any life insurance or business protection you hold.
We work with Ireland’s leading life & pension companies
Frequently asked questions
What is a Section 72 life assurance policy?
A Section 72 life assurance policy is a Revenue-approved whole-of-life insurance policy designed to cover an expected inheritance tax (Capital Acquisitions Tax) liability. When structured correctly, the policy payout can be used by beneficiaries to pay inheritance tax without having to sell family assets such as property, farms or businesses.
How does a Section 72 policy reduce inheritance tax?
It doesn’t reduce the tax itself. Instead, it provides a tax-efficient lump sum on death that is specifically intended to pay the Capital Acquisitions Tax (CAT) bill. Because the policy is Revenue-approved and structured correctly, the proceeds are treated differently for tax purposes and can be used to clear the inheritance tax liability.
What is a Section 73 savings plan?
A Section 73 policy is a specialised investment plan designed to build up a fund to pay a future inheritance tax liability. It is commonly used by parents or grandparents who want to proactively plan for inheritance tax during their lifetime rather than relying on a life insurance payout.
What is the difference between Section 72 and Section 73?
Section 72 Section 73 Life insurance policy Investment savings plan Pays out on death Builds value during lifetime Covers expected inheritance tax bill Creates a fund to pay future tax Typically whole-of-life cover Investment-based structure Section 72 protects against tax on death, while Section 73 is a long-term tax planning strategy.
Who should consider a Section 72 policy?
You may benefit from a Section 72 policy if: Your estate exceeds current inheritance tax thresholds You own property, farmland or a family business You want to avoid forcing beneficiaries to sell assets You want certainty around inheritance tax planning It is particularly common among property owners and business owners in Ireland.
Who is Section 73 most suitable for?
Section 73 is often suitable for: Parents planning large gifts to children Grandparents planning wealth transfer Individuals who want to gradually build a tax fund Families seeking structured inheritance tax planning It works best when planned well in advance.
What is the inheritance tax rate in Ireland?
The current Capital Acquisitions Tax (CAT) rate in Ireland is 33%. Tax applies to gifts and inheritances above the relevant tax-free thresholds, which vary depending on the relationship between the giver and the beneficiary. (We recommend always checking current thresholds, as they may change in future budgets.)
Can Section 72 or Section 73 policies eliminate inheritance tax?
No. They do not remove the tax liability. Instead, they are structured financial planning tools designed to fund the liability efficiently and prevent financial stress for beneficiaries.
Are Section 72 and Section 73 policies approved by Revenue?
Yes — when structured correctly through approved providers, both policies are recognised under Irish tax legislation for inheritance tax planning purposes. However, proper advice and structuring are essential to ensure compliance.
When should inheritance tax planning start?
The earlier, the better. Inheritance tax planning is most effective when started years before assets are transferred. Early planning provides: Lower insurance costs More investment growth potential Greater flexibility Reduced financial pressure on beneficiaries
How do I know if I need a Section 72 or Section 73 policy?
The right strategy depends on: Your total estate value Your family structure Your gifting plans Your health (for insurance options) Your long-term financial goals A personalised inheritance tax review can help determine the most suitable solution.
Worried about an inheritance tax bill?
Speak to a qualified Greenway adviser — free, no jargon. We’ll estimate your family’s exposure, review any existing policies, and set up the right Section 72 or Section 73 plan for your situation.
Important information. This page is general information and not financial advice. Everyone’s circumstances are different, so please talk to us before acting. Greenway Financial Advisors Ltd. is regulated by the Central Bank of Ireland.