Chancellor Alistair Darling
announced in his Pre-Budget speech a change
to the way in which the inheritance tax (IHT)
nil rate band of £300,000 can be used
for married couples and civil partners.
Before the introduction of this change, where
an individual died and left some or all of
their property to their spouse or civil partner,
then that transfer was exempt from IHT. However,
on the death of the second spouse or civil
partner, only one nil rate band was available,
meaning that a nil rate band had been effectively
wasted. This is because of the IHT exemption
for transfers between spouses or civil partners.
The Pre-Budget change means that the proportion
of any nil rate band unused on the first death
may be used when the surviving spouse or civil
partner dies.
This change is effectively backdated for situations
where a spouse or civil partner died before
the announcement of the change, as long as
the ‘surviving’ spouse or civil
partner dies on or after 9 October 2007.
This is a significant change that will affect
many families and HMRC have now issued the
relevant form IHT216 to claim a transfer of
any unused IHT nil rate band.
Please do contact us if you would like more
advice on this issue.
Internet link:
IHT216
form |
