Currently, in England and Wales only those who are married or civil partners do not have any inheritance tax to pay on assets left to them by their spouse.

Any other class of people who live together do not enjoy the same inheritance rights and can potentially see an inheritance tax bill of 40% of anything over the £325,000 nil rate band threshold.

Proposed IHT Changes

Following the case of Catherine and Virginia Utley, where two sisters who have lived together for over 30 years were facing an inheritance tax bill of £140,000, the House of Lords have proposed to extend the inheritance tax exemption to siblings over the age of 30 years old who live together and have been for at least 7 years prior to the date of the first death.

Will these changes be automatically applied to a Will?

These proposed changes are certainly positive for those effected, but we at Cunningtons would advise not to rely on this as a reason for not having your Will drafted, as depending on how you and your sibling own the property your share may not automatically pass to them upon your death.

It is, therefore, increasingly important that your Will is drafted by a qualified solicitor.

If you would like further information about having your Will drafted or inheritance tax and estate planning please contact the Wills and Probate team on 01376 567280.

2 thoughts on “Inheritance tax: Siblings could soon be exempt”

    1. Thank you for your enquiry.

      Inheritance tax is assessed on the deceased’s assets as at the date of their death, which includes any assets passing by way of survivorship, assets held in trust and any gifts or transfers of value made within the seven years immediately prior to death. Everyone is entitled to a tax free allowance, known as the nil rate band of £325,000, if the deceased leaves a property to their direct descendants their Executors can claim an additional tax free allowance known as a residence nil rate band of £175,000.000, if the deceased was a surviving spouse or civil partner who inherited the whole or any part of their spouse or civil partner’s estate then their executor can make a claim to use their spouse or civil partner’s unused Tax is usually charged at 40% of anything over the tax free allowances however it may be charged at the lower rate of 36% if 10% or more of the estate passes to charity.

      If you require any specific advise please contact a member of our Private Client team on 01376 567280.

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