Good News on Inheritance Tax at last!

On 9th October 2008 the Chancellor doubled the maximum available Inheritance nil rate band for married couples and those in civil partnerships from £300,000 to £600,000 with immediate effect. Where one spouse or civil partner dies without making full use of his or her nil rate band, the nil rate band of the survivor will be increased by adding the unused proportion of the nil rate band of the first to die. It does not matter when the first spouse or civil partner died. There are time limits for making the claim on the second death and the claim will be for the proportion of the nil rate band unused at the first death calculated by reference to the value of the nil rate band in force at the death of the survivor.

It is important that the estate of the survivor is administered by someone who knows how to make the claim to minimise Inheritance Tax (which is not inconsiderable at 40% of the taxable estate) otherwise the concession will be lost.

This change allows many couples to achieve what they always wanted (Tax considerations apart) that is to allow the surviving spouse or Civil Partner ownership of the couple's combined assets. Are the combined assets of you and your partner under £600,000? If so you may wish to replace any existing nil rate band discretionary trust in your present will with a simple outright gift to your partner on the first death. Such a gift will not be appropriate in all circumstances (for example where there are second marriages and step children) but a visit to your Solicitor to review your will allows you to consider the options.

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