For many, the thought of losing their wife, husband or long-term partner is the stuff of nightmares; the thought alone creates a feeling of all consuming grief.
Now imagine that, despite losing the person closest to you, the property and estate you share is to be charged for inheritance tax (IHT). In the real world, shouldn’t all cohabitating couples be protected from such a merciless burden?
Disgracefully, long-term cohabitating siblings or people in platonic long-term cohabitating relationships do not have any protections from inheritance tax; meaning that if a sibling dies, any estate in excess of the nil rate band of £325,000, is liable to be charged inheritance tax at 40%.
Any estate that falls into this price bracket could be expected to pay tens of thousands of pounds to the government in IHT. For many, this would mean re-mortgaging the property or being forced to sell the property brimming with a lifetime of memories.
Again, this is something that people in marriages or civil partnerships are saved the indignity of. Since civil partnerships became law in 2004, any couples in same sex and heterosexual marriages are protected from IHT until both people die.
Most notably, the longstanding plight of the Burden sisters highlights the overwhelming injustice of this issue. Whilst living unmarried together in their family home, they have continuously petitioned the government to acknowledge relationships like their own and protect their rights.
They argued that long-term cohabitating sisters deserve equal protections, to those in sexual relationships, for IHT purposes. Unfortunately, The European Court of Human Rights ruled against them in 2008.
Why are siblings and those in a platonic partnership excluded and discriminated against?
This is a question that Conservative peer and historian, Lord Lexden, has posed to Parliament, as he tries to extend the right to form a civil partnership to siblings over the age of 30 who have lived together for a minimum of 12 years.
Baroness Williams, minister of Trafford, has responded by saying: “civil partnerships are a significant instrument, allowing same-sex couples to have their intimate partnership recognised by society and the law. Sibling IHT issues should not be solved through civil partnerships as this is an inappropriate vehicle.”
Any IHT deferral to family issues should be addressed by the treasury according to government officials.
However, the vicious cycle of government ignorance and denial is leaving a significant section of society living in a perpetual state of fear and confusion. Hopefully, Lord Lexden’s campaign to vocalise these legitimate claims will not fall of deaf ears.
Do you know families that have been affected by this issue? Are you finding more siblings looking for advice on inheritance tax planning?
