Cohabiting siblings could be exempt from inheritance tax under proposed law
Adult siblings who live together could be exempt from paying ‘unfair’ inheritance tax when transferring property after death under a proposal set to be debated in the House of Lords.
The new rule would give siblings the same IHT exemption rights as married couples and civil partners when it comes to transferring property.
Currently, married and civil partners can transfer £325,000 tax free, with subsequent amounts above this charged at 40%.
But Conservative life peer, Lord Lexden, has campaigned over the past two years to end the “gross unfairness” with which cohabiting sibling couples are treated by the legal and tax systems.
Last week, he introduced a new bill to the House of Lords which would tackle the “worst injustice” that cohabiting sibling couples face: the potential loss of the shared home when one of them dies because IHT has to be paid by the survivor.
The bill states that siblings must have lived together continuously for seven years and the surviving sibling must be over the age of 30.
Sibling refers to brothers, sisters, as well as half brothers and sisters and it would apply to England and Wales, Scotland and Northern Ireland.
The bill will need to go through a series of readings in both the House of Lords and House of Commons before it could become law. No timeline has yet been set.