Meet the unexpected victims of inheritance tax

William Edwards from our Private Client team recently spoke to The Sunday Times Money for an article which warns that anyone leaving property to siblings, nieces, nephews and friends is being cheated out of valuable reliefs that are available to parents and married couples.

When you die, the first £325,000 value of your estate can be passed on IHT-free. If you are leaving your family home to a direct descendant (a child, stepchild or a grandchild) you get another £175,000 nil-rate allowance and anything that you leave to a spouse or civil partner is IHT-free.

But the estates of unmarried couples and platonic family members or friends who live together, will be taxed at 40 per cent on any assets over the £325,000 tax-free threshold…

• William Edwards, a partner at the law firm Edwin Coe, said unmarried joint owners of a property may be able to claim a discount of up to 15 per cent on the value of the deceased’s share of the property. If someone owned 50 per cent of a £1 million house, the joint ownership discount would reduce the value of their share for inheritance tax purposes from £500,000 to £425,000.

Read the full article in The Sunday Times (subscription may be required).