Fairer Inheritance Tax For Siblings
The Inheritance Tax Act 1984 (Amendment) (Siblings) Bill (the “Bill”) has been proposed to amend the Inheritance Tax Act 1984 to make transfers between siblings exempt in certain situations. The Inheritance Tax Act 1984 provides legislation in regards to Inheritance Tax and how it is charged.
How does the Bill amend the current legal position?
The Bill proposes to amend the Inheritance Tax Act 1984 by adding a clause 18A titled “Transfers between siblings”. This clause stipulates that transfers between siblings are exempt in certain circumstances. An exempt transfer means that it is exempt from Inheritance Tax.
What are the conditions of the new provision?
The sibling must have resided in the same household as the transferor for a continuous period of seven years ending with the date of the transfer and must have reached the age of 30 before that date.
What constitutes a ‘sibling’ for the purpose of the Bill?
A sibling is defined as a brother, sister, half-brother or half-sister of the transferor.
So, what do these amendments mean?
These amendments aim to relieve the IHT burden where siblings have lived together for many years, and are the main beneficiaries in each other’s wills. The purpose of these amendments is to remove the Inheritance Tax for transfers between siblings who are financially reliant on each other or whose lives are so closely interlinked due to living together. This will hopefully make the inheritance tax legislative framework fairer in these circumstances.
Get in Touch
Should you have any queries in relation to any points mentioned in this update, please do not hesitate to get in touch with Daniel Wilson.
We regularly advise clients on the implications of the Inheritance Tax Act 1984. However, please note that we are not tax advice specialists.
You can find out more about our EMW Wealth team here.
This article was prepared by Sarah Simon.