Published on: 23rd August 2021

Casey & Associates can often help Partners save Inheritance Tax

According to the Office for National Statistics around 20% of couples are not married or in a (opposite sex) Civil Partnership. Partners do not receive the same Inheritance Tax treatment as Spouses.

In this article we will refer to:

• couples who are married or in a (opposite sex) Civil Partnership as Spouses.
  
  
• couples who are not married or in a (opposite sex) Civil Partnership as Partners.

There is no Inheritance Tax due on the transfer of assets from Spouse to Spouse. There is Inheritance Tax due on the transfer of assets from Partner to Partner. Unused Inheritance Tax allowances can be transferred from Spouse to Spouse but not from Partner to Partner.

Let us look at two examples to illustrate the difference:

John and Mary own a house valued at £550k with £100k savings. They have no children.

Firstly, let us look at the situation if John and Mary are Spouses.  

• John dies first leaving everything to Mary. No Inheritance tax is due and John has not used any allowance.
• Mary now has an Estate valued at £650k.
• Mary dies. Mary can use her IHT allowance (£325k) and John’s unused allowance (£325k). Value of Estate = £650k and IHT allowances = £650k which means taxable Estate = £0 and tax to pay = £0.

Now let us look at what happens if John and Mary are Partners.  

• John dies first leaving everything to Mary. No Inheritance tax is due but all of John’s allowance is used up.
• Mary now has an Estate valued at £650k.
• Mary dies. Mary can use her IHT allowance (£325k) only. Value of Estate = £650k and IHT allowance = £325k which means taxable Estate = £325k and tax to pay = £130k.

By the careful use of one or more trusts Casey & Associates can create Wills for John and Mary as Partners which will reduce the tax due from £130k to £Nil. That means £130k more for the beneficiaries of Mary.

If you are home owning Partners and you would like to speak to one of our helpful and friendly Consultants, contact us by calling 01732 868190 or by using our website by clicking here.

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Our Covid-19 policy is now that if you wish to give instructions or require general information about our Wills, Lasting Powers of Attorney or Trusts then we will carry out a telephone or Zoom appointment. However, if you wish to give instructions to one of our Consultants and you feel that you can only do this at a Face to Face meeting we are offering, at our Consultant’s discretion, a limited number of Face to Face appointments in most of the areas we normally cover (subject to Government advice). To see the areas we normally cover please click here. To arrange an appointment please telephone 01732 868190 or click here.

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