It is widely known that in the UK the Inheritance Tax exemptions available on death have not substantially changed in line with inflation and the increasing value of properties.
How much can you inherit without paying Inheritance Tax?
The existing Inheritance Tax free allowance available to everyone is £325,000, which remains unchanged since 2009.
To try and deal with these issues a new Inheritance Tax free allowance was introduced in 2017. This increased the amount of an estate that can be transferred on death, tax free. However, this only applies where a property is left to direct decedents, and does not apply where the property in the estate is being left from one sibling to another.
What are the new Inheritance Tax laws for siblings?
The new Bill proposes to amend the Inheritance Tax Act 1984 to make transfers of property between cohabiting siblings exempt from Inheritance Tax in certain circumstances.
This can be approved if siblings;
- have lived together for more than 7 years before the date of death
- have lived together for more than 7 years before the transfer of the property if it is a lifetime gift
- are over the age of 30 at the date of death
- are over the age of 30 at the transfer of the property if it is a lifetime gift
They will then not have to pay Inheritance Tax on the property on the death of the first sibling.
Will new Inheritance Tax rules benefit siblings?
Whilst this is likely to only assist a very small portion of the population it is hoped that it will make the Inheritance Tax rules fairer in situations where siblings have spent much of their lives living together. Removing any need for the surviving sibling having to sell their home to foot the inheritance tax bill.
Find out more
There is still time before the Bill is passed, but if you think that this may affect you, and you would like some Inheritance Tax planning advice, then do get in touch with our expert team who can advise you on your position.