What are you looking for?

23 January 2020 | Comment | Article by Matthew Evans

Proposed extension of inheritance tax exemption to siblings

The first reading of a bill to make transfers of wealth between siblings exempt from inheritance tax in certain circumstances, took place on 14 January 2020.

The bill proposes to amend the Inheritance Tax Act 1984, so as to exempt any transfers of assets (which could include cash or property) between siblings from inheritance tax, in certain circumstances. Such a transfer of property might, for instance, take place on the death of the first sibling, if they left their estate to the surviving sibling. To qualify for the exemption, the siblings must have lived in the same household for a continuous period of seven years, and the sibling who receives the property must be over the age of 30. The exemption will extend to half-brothers and half-sisters, as well as brothers and sisters.

Lord Lexden, a Conservative peer, has introduced the bill as part of a campaign for co-habiting siblings to be treated fairly by the UK tax system. Under the current law, where siblings co-habit in a valuable property, inheritance tax may be due on the death of the first sibling which could force the surviving sibling to have to sell their home to cover the tax bill. Under the proposals, co-habiting siblings who meet the criteria above will be treated for inheritance tax purposes as if they were married or in a civil partnership, so no tax will be due on the death of the first to pass away.

Under the current law, the inheritance tax exemption applies only to couples who are married or in a civil partnership, and does not apply to other co-habiting couples. Co-habiting couples do, of course, have the option of marrying or entering into a civil partnership to take advantage of the tax laws (if they wish to do so!), whereas co-habiting siblings do not have this option.

The position of co-habitants in relation to inheritance in general (i.e. their rights to inherit from their co-habitant, as well as the tax implications), is one the Law Commission are alive to (having considered it in a project in 2011), and may well be the subject of legal reform at some point in the future.

The bill proposing the inheritance tax exemption for co-habiting siblings will need to be debated in the House of Lords and House of Commons before it can become law. More information on the progress of the bill through parliament can be found on the UK Parliament website.

For more information on inheritance tax, please visit our personal tax advice page or read our previous blog on Inheritance tax exemptions and reliefs.

Author bio

Matthew Evans


Matthew is a partner and heads up the firm’s private wealth offering. He is responsible for the development, implementation and long-term strategy of the team.

Matthew has a UK-wide reputation in the field of contentious probate, recognised by his clients and peers in the leading legal directories.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.


Next steps

We’re here to get things moving. Drop a message to one of our experts and we’ll get straight back to you.

Call us: 033 3016 2222

Message us