How to pay your CAT

Unlike income tax, which employers often deduct at source, Capital Acquisitions Tax is entirely self-paid. The beneficiary files the IT38 online and pays the same amount. Revenue does not wait for the payment; late filings accrue interest and penalties even when the return is eventually filed correctly.

Standard payment methods

Revenue accepts CAT payments by four main routes:

Debit or credit card online (most common). Pay at the end of the IT38 filing process. Cards from Visa, Mastercard, and most Irish-issued debit cards are accepted. No additional fee. Funds settle immediately.

Single Debit Authority. Authorise Revenue to debit a specified amount from a nominated Irish bank account. Settlement is fast (typically one working day). Useful for larger amounts where card limits apply.

Revenue Debit Instruction (RDI). A persistent authorisation that allows future Revenue obligations to draw on the nominated account. Relevant for beneficiaries with an ongoing Revenue relationship (self-employed, landlord). Less relevant for one-off CAT payments.

Bank transfer / EFT. Manual transfer to Revenue's collection bank account, quoting the payment reference from the IT38. Takes 1 to 3 working days. Slower than card but useful for very large amounts that exceed daily card limits.

Cheques, postal orders, and cash are not accepted. Revenue moved to digital-first payment some years ago.

Daily limits

Most Irish debit and credit cards have daily transaction limits of €5,000 to €10,000. Large CAT payments above these limits must be paid by multiple smaller card transactions across successive days (not tidy, but works) or by Single Debit Authority or bank transfer.

If the CAT charge is above €20,000, Single Debit Authority is usually the simplest route.

Interest on late payment

Interest accrues daily at the Revenue rate (currently 8% per annum on late CAT, confirmed at revenue.ie) from the day after the filing deadline. This compounds monthly in practice.

Late interest is charged even if the late filing was inadvertent. Good-faith beneficiaries who miss the deadline by a few days still pay interest; they just avoid the higher penalty charge that applies to deliberate under-reporting.

Instalment arrangements

Revenue will in some cases accept payment in instalments where paying the CAT in full immediately would cause genuine financial hardship. Instalment arrangements are not automatic and require a written application before the IT38 deadline, not after.

The application should include:

1. A description of the financial hardship (for example, the inheritance is primarily illiquid property and the beneficiary cannot raise the CAT without selling the property at a forced-sale discount).
2. A proposed payment plan: amount per instalment, frequency, total duration. Revenue typically accepts plans of up to 5 years for CAT.
3. Evidence of inability to pay in full: bank statements, mortgage balance, other debts.
4. A commitment to pay interest on outstanding amounts at the Revenue rate.

Revenue approves most reasonable applications from first-time applicants who engage proactively. The worst approach is to miss the deadline, pay nothing, and wait for Revenue to pursue.

Funding CAT when assets are illiquid

The classic problem: the inheritance is primarily a family home or a farm. The CAT charge is substantial. The beneficiary has no cash to pay the tax, does not want to sell the property, and does not qualify for an exemption.

Practical options, in order of preference:

1. Section 72 life insurance proceeds. If the deceased had a Section 72 policy during their lifetime, the proceeds can fund the CAT tax-free. This is the cleanest solution but only works if the policy was set up before death.

2. Borrowing against the inherited property. Most Irish banks will lend against an inherited property once the Grant has issued and the beneficiary is the legal owner. Loan-to-value typically up to 60%, over terms up to 20 years. Works where the beneficiary plans to keep the property and service the loan from their ordinary income.

3. Selling a portion of the inheritance. Selling financial assets (shares, investments) to fund CAT on the physical assets. Straightforward where the estate has mixed assets.

4. Revenue instalment plan. As above. Interest accrues at 8% but the beneficiary keeps the property.

5. Selling the inherited property. Last resort. Usually generates a partial Capital Gains Tax charge on any appreciation between the valuation date and the sale date, on top of the CAT, so the total tax cost is higher than funding from other sources.

Credits and refunds

If the beneficiary overpays (for example, later discovers a deductible liability that was missed on the SA2), the beneficiary applies for a refund through their IT38 amendment or through a separate written request. Refunds come back through the same channel as the original payment.

Revenue processes CAT refunds within 30 to 90 days of a valid application. Refunds on disputed cases can take longer if Revenue requests supporting documentation.

Double Taxation credits

Where the beneficiary also pays foreign inheritance tax on the same inheritance (for example, UK Inheritance Tax on a UK property), a Double Taxation credit is claimed on the Irish IT38 to prevent the same income being taxed twice. The credit is the lower of the Irish CAT and the foreign tax, not the full foreign tax.

Priority of the CAT charge

CAT is the beneficiary's personal liability, not a charge on the estate. Revenue's recovery path is against the beneficiary, not the executor. The exception is where the executor distributed the estate before Revenue clearance and the beneficiary is subsequently found to owe CAT they cannot pay; in that case Revenue can pursue the executor personally for the shortfall.

For this reason, the executor's usual practice is to retain a reserve until Revenue clearance is obtained, regardless of whether the beneficiaries have already paid their own CAT.