Inheritance Tax (IHT) is levied on a person’s estate when they die and can also be payable during a person’s lifetime on certain trusts and gifts. The current IHT nil rate band is £325,000 per person, below which no IHT is payable. This is the amount that can be passed on free of IHT as a tax-free threshold.
In most cases, an exemption from IHT is available on assets that are
passed on death to a surviving spouse or civil partner. Unlike some countries, there is no similar provisions in the UK for exempt transfers between siblings, who have lived together for many years. A new Bill that would amend the existing rules and provide relief for siblings under specific scenarios is currently making its way through the House of Lords.
This Bill, upon receiving
Royal Assent, will allow a surviving sibling to benefit from an
IHT exemption. The surviving sibling would need to be over the age of 30 and have lived with their sibling for more than 7 years before the date of death. For the purposes of this Bill, siblings are defined as sisters, brothers, half-sisters and half-brothers.
These changes, whilst not having an impact on many people, will offer significant benefits for those that do qualify and could help elderly surviving siblings stay in homes that they have lived in for many years. Until these changes become law, there are certain
estate planning actions that should be explored if you are in a similar position.
Contact Moore (South)'s Private Client Tax Team
If you are looking for more information on exempt transfers between siblings our private client tax team, specialising in inheritance tax can provide you with the advice and information that you need to be able to understand the exempt transfers between siblings. Our
private client tax team offer a free initial consultation.