Inheritance Tax: Two Sisters Fail to change Rules for Unmarried Couples

Joyce and Sybil Burden, two sisters in their 80s who have lived together all their lives, have failed to overturn a European Court of Human Rights decision that they were not entitled to the same tax treatment as a married couple or couple in a civil partnership.

The two sisters jointly own their home, which in 2006 had been valued at £875,000. Both sisters have made Wills stating that the first to die will leave her entire estate to her surviving sister. When that happens, the surviving sister will face a tax bill for 40% of the inherited share. In the current tax year, that bill would be approximately £50,200 for tax due on a share of property worth £437,500.

Under English inheritance rules, when a spouse or civil partner dies they can leave their entire estate to their surviving spouse or civil partner without facing a tax charge. Any unused inheritance tax allowance can also be transferred between spouses or civil partners. However, if partners are not married or civil partners, but living together or cohabiting, then transferred estates are subject to tax at 40% above a nil-rate band of £312,000.

Joyce and Sybil Burden have campaigned for the rules to be changed. They argue that because they have lived together since birth, they should be given the same treatment on inheritance tax as a married couple or civil partnership. However, the European Court said that living together could not be compared with being married or entering a civil partnership and found that English inheritance laws did not breach safeguards in the convention on human rights against discrimination and protection of property.

If you are concerned about inheritance tax rules and how they will effect you or considering making an inheritance tax efficient will, please contact our Wills team on 01858 445480 now.