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Insights

Inheritance Tax for home-sharing siblings

Posted on 15th January 2021 in Later Life Planning

Posted by

Rachael Morley

Associate and Solicitor
Inheritance Tax for home-sharing siblings

Last year, a new private members’ bill was introduced to Parliament, calling for there to be a ban on Inheritance Tax being paid by siblings who live together.

The concern is that, where siblings share a home, the death of one of them may mean that the survivor is forced to sell the property to pay the Inheritance Tax. This is because there is no exemption from tax for transfers on death between siblings, unlike with married couples or those in civil partnerships.

The bill aimed to change the Inheritance Tax laws for siblings sharing a home. If successfully passed, it would mean that siblings over 30, who have lived together for at least the last seven years, would not have to pay Inheritance Tax when one of them leaves their share of the home to the other.

This undoubtedly would be a welcome change for many and would take away some of the worry from the future. But, if this new ‘sibling’ exemption comes into force, what about others? Many people are surprised to learn that there is no similar exemption for long-term couples and they could face the same situation. How about other relatives, such as parents living with children? The bill does not cover these.

In any case, it is all is a bit academic at the moment. Having been introduced with publicity this time last year, the bill is yet to have a second reading.

 

For any help with tax and later life planning please contact our dedicated team, or for more information visit our tax and later life planning page.

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