Chapter: 2 - Inheritance Tax Mitigation: The Basics

Transfers between members of the older generation: Inheritance Tax

2.10.2

The IHT exemption (see 2.2.3 and 13.2) has since 5 December 2005 applied equally to transfers between members of a registered civil partnership as to spouses.  The interesting thing is that what matters is the legal relationship of marriage or registered civil partnership, not the fact that (as required by the CGT no gain – no loss rule) the couple are living together.  Indeed, they may have separated many years before, but for whatever reason (religious or otherwise) have not broken the legal relationship: the IHT exemption remains.  The only point to watch is the case where the transferor is UK domiciled but the transferee is not, for all IHT purposes, in which case the exemption is limited to £55,000 on a lifetime basis (IHTA 1984 s18(2)) – but see 2.2.3 for possible future repeal where the transferee is domiciled within the EU.