Inheritance Tax: Cohabiting Siblings

Lord Campbell-Savours Excerpts

Wednesday 10th February 2021 Lords Chamber

[Baroness Penn (Con)]

I remind noble Lords of the context that each individual can pass on at least £325,000 without any inheritance tax charge. That is well above the average house price in the UK. For those who are affected, there are also provisions where it is possible to have 10 years to pay off inheritance tax in instalments if the estate contains a house that is unsold.

[Lord Campbell-Savours (Lab) [V]]

My Lords, to follow up on the interesting question from the noble Baroness, Lady Deech, is there not a compromise? If the problem is a requirement for a sibling to sell a jointly owned and occupied property to pay IHT, why not simply defer the deceased’s liability, thereby leaving the surviving sibling undisturbed? The taxman would ultimately be paid. This could be done on the basis of a charge on the property, perhaps even tapered in favour of the Revenue or the surviving sibling, dependent on tax rate policy.

[Baroness Penn (Con)]

My Lords, to add to my previous answer, for those in certain circumstances, joint ownership would also mean that a house had to exceed £650,000—more than the average house price, including in London—to be liable for inheritance tax. As I say, there are arrangements in place whereby you can have up to 10 years to pay off inheritance tax in instalments if the estate contains an unsold house.