Overview

This bill proposes to amend the Inheritance Tax Act 1984 to exempt certain transfers of value between siblings from inheritance tax. The exemption will apply only under specific conditions relating to length of cohabitation and age.

Description

The bill adds a new section (18A) to the Inheritance Tax Act 1984. This section introduces an exemption for transfers of value between siblings, subject to two conditions:

• Cohabitation: The siblings must have lived together in the same household continuously for at least 7 years immediately preceding the transfer.
• Age: The receiving sibling must have reached the age of 30 before the date of the transfer.

The definition of "sibling" includes brothers, sisters, half-brothers, and half-sisters. The exemption applies to the value transferred that is attributable to property included in the receiving sibling's estate or that increases the value of their estate.

The bill applies to England, Wales, Scotland, and Northern Ireland and will come into effect two months after it is passed.

Government Spending

The bill is expected to reduce government revenue from inheritance tax. The exact amount is difficult to predict without knowing the number of siblings who will meet the criteria for the exemption and the value of assets transferred. No specific figures are provided in the bill itself.

Groups Affected

The bill will primarily affect:

• Siblings: Siblings who meet the specified conditions will benefit from reduced or eliminated inheritance tax liability on transfers of property between them.
• HMRC (Her Majesty's Revenue and Customs): HMRC will experience a decrease in inheritance tax revenue collected.
• Estate Planners: Estate planning professionals will need to advise clients on how this new exemption affects their inheritance tax strategies.

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