A loophole that allowed wealthy people to transfer valuable life assurance policies without paying tax was quietly shut during last year’s Budget.
In discussions with the Department of Finance, the Revenue Commissioners said that the public could not be alerted to the legal gap before it was closed.
They said if people got wind of it, others were likely to use the loophole for aggressive planning purposes to avoid paying tax on inheritance or gifts.
Normally, life assurance policies pay out on the death of a person and trigger payment of Capital Acquisitions Tax.
However, a small number of people figured out that if the policy were transferred over to a spouse, son, daughter, or somebody else – the tax could be dodged.
A Department of Finance memo said the latest figures showed that around 300 such policies were assigned to somebody else each year.
Not all of those transfers were linked to tax planning, with Revenue having so far identified less than a dozen clear-cut avoidance cases.
However, Revenue were at pains to say no information on the loophole should be made public in advance of Budget 2026.
The submission said: “Consultation with stakeholders is not proposed at this time as there is a potential for tax planning.
“The anti-avoidance team in Revenue’s Business Taxes Policy and Legislation Division strongly recommends against publicising the issue for this reason.”
The record – which was released under FOI laws – added: “Revenue has identified a number of cases where an individual has taken a gift [or] inheritance and disposed of this interest prior to the insurer making a payment.
“Therefore, the individual received the benefit of the gift [or] inheritance without attracting a [tax] liability.”