New Inheritance Tax rules discriminate against the childless say North East lawyers
Darlington law firm, Latimer Hinks, have sent an open letter to the Chancellor, George Osborne stating the changes to the Inheritance Tax (IHT) rules discriminate against the childless.
Currently, where an estate is worth more than £325,000, it is subject to inheritance tax; this means 40% of the value of the assets above the £325,000 threshold are handed over to HMRC.
Married couples and civil partners are allowed to combine their allowance, so they can pass on assets worth up to £650,000 before inheritance tax is due.
From 6th April 2017, the Government is adding a family home allowance to the tax-free allowance, this will start at £100,000 per person in 2017, rising to £175,000 by April 2020.
This means that individuals will eventually be able to pass on an asset worth up to £500,000 without any inheritance tax being due. For married couples and civil partners this adds up to a combined tax-free allowance of £1 million.
However, the new Family Home Allowance only applies to direct descendants, meaning those who do not have children, stepchildren or grandchildren to pass their homes onto, will not be eligible.
Latimer Hinks CEO, Anne Elliott, said: “We’ve had enquiries from people asking whether they can benefit from the new legislation. It’s awful to have to break the news to them that, if they are childless, these new rules don’t apply.
“It’s nothing short of discrimination to say if you are childless, you will not get the same financial advantages as those who do have children, even though you have contributed to society as a taxpayer by helping to pay for education, maternity leave and childcare costs.
“What about the sisters who have never married and wish to leave their home to each other? Or the auntie who was unable to have children of her own and loves her niece as a daughter? Or the parents who tragically lost their only child? Why shouldn’t they be able to pass their home to whomever they choose, with the same financial advantages as those who do have children?
“We are calling upon George Osborne to change the discriminatory nature of new Inheritance Tax arrangements by giving those who are childless exactly the same allowances as those with direct descendants.”
Lawyers at Latimer Hinks have also launched a government petition in a bid to trigger a response and a parliamentary debate.
You can view and/or sign the petition online here: https://petition.parliament.uk/petitions/105736
What are your thoughts on the IHT changes — do you think they are fair given the circumstances or are they discriminatory for certain groups of society?