05 February, 2020
A bill has been submitted, by Lord Lexden of the Conservative Party, to the House of Lords which proposes amendments to the Inheritance Tax Act 1984. If the bill is successful, it will allow (in certain circumstances) for property to be transferred between siblings without attracting Inheritance Tax (IHT). At present only married couples and those in civil partnerships benefit from IHT relief when the property is left to them from their deceased spouse. The bill states that the siblings must be full or half blood and have lived in the same property as their deceased sibling continually for seven years prior to the transfer.
At this time, the only tax relief available to siblings (without children) is their individual nil rate band (fixed at £325,000). If the deceased sibling has assets over this amount, their estate is subject to 40% IHT which, if the surviving sibling cannot discharge this without using proceeds from the property, they would have to sell the home they lived in together.
This follows on not long after Heterosexual couples were granted to enter into Civil Partnerships, which had also been attempted to cover siblings who cohabited; however, this was rejected as it would provide them with the same rights as a married couple.
The bill will have to go through a second reading (date to be announced), committee stage, report stage and third reading in both the House of Lords and the House of Commons before it can become law.
For more information contact Megan Diamond in our Wills, Probate, Tax & Trusts department via email or phone on 01772 220204. Alternatively send any question through to Forbes Solicitors via our online Contact Form.