| 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 |
