Changes are afoot
Potential changes currently before Parliament may spell good news for siblings and half-siblings who live together. The first reading of a Bill took place on 14th January 2020. It proposes that some transfers of wealth between siblings could be treated as though they were between spouses or Civil Partners.
Where this becomes particularly important is when siblings are living together. When one dies, depending on the size of their estate, the survivor might have to pay Inheritance Tax. This happens even though the house may have been left to the surviving sibling. Many people see this unfair as the surviving sibling might have to sell the house to pay the Inheritance Tax bill.
Married couples and Civil Partners
If you are married or in a civil partnership, you can transfer unlimited assets to your other half, including on death, without payment of inheritance tax. Any allowance is transferred to the survivor, and is taken into account on their death. The new proposals mean that sibling living together would be treated the same way in many circumstances.
The proposed new rules
These state that siblings would have to have been living in the property for at least 7 years. The survivor must be over 30 years old. In these cases, siblings will be treated in the same way as if they were married for Inheritance Tax purposes. The Bill still has many hurdles to jump, and may be amended or even scrapped, but we feel that it is a good first step forward. You can keep an eye on the progress of the Bill here.
What’s rather disappointing is that the same rules can’t be applied to unmarried couples. Perhaps the amount of tax lost by HMRC in these cases has something to do with it….
If you have any questions about this or other Inheritance matters, get in touch here or give us a call on 01473 358195.