A bill that proposes amendments to the Inheritance Tax Act 1984 is currently before the House of Lords for debate and is awaiting its second reading. If successful, the bill would allow the transfer of property between siblings to be exempt from inheritance tax (“IHT) in certain circumstances.
Currently, only property passing between married couples and civil partners does not attract IHT. However some people may not have a spouse or partner to give the family home to, but have a close sibling who, in some cases are living with them and even providing care.
Therefore, this bill would prevent the tragic cases of siblings who live together from being forced out of their homes when one of them dies, because they cannot afford the resulting IHT.
In its current form, the bill states that any brother, sister, half-sister or brother must have lived in the same property continually for seven years and the survivor has to be over 30 years of age to qualify for exemption under the proposed rules.
Please note there is still however no such protection for other couples who cohabit.
It is a welcome amendment but it still has to go through a lengthy process in the Lords and House of commons before it can become law. We will keep you posted!
Whatever the outcome, of course appropriate IHT planning can also remove unnecessary exposure to IHT and minimise the potential disruptive effect of such costs on future livelihood.
For more information and advice on Inheritance Tax Planning, please call us on 01344 636337