Claim your IHT relief

Chancellor Alistair Darling announced in the Pre-Budget Report 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. In order to agree the amount of nil rate band available it is important to establish the value of the estate on the first death.

Backdated change

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.

Procedures in place but no formal agreement

HMRC have now issued the relevant form and details of the procedure and information required to support the claim but have confirmed that they will be unable to settle any cases until the proposed changes have become law in the Finance Act, probably in July 2008.

Please contact us if you have any queries on this issue.

SLATERS CHARTERED ACCOUNTANTS

Claim your IHT relief

Backdated change

Procedures in place but no formal agreement

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