A recent House of Lords judgement, indicating a softening of attitudes to gay couples, and the incorp...
One outcome could be the abolishment of free gift-giving and, in return, the raising of the minimum IHT threshold above £231,000.
UK laws have traditionally assumed a partnership to comprise man and wife and this clearly applies to IHT. As this assumption becomes increasingly unrealistic, the Government may be forced into choosing between allowing tax-free gift-giving to a greater number of people or stopping the practice entirely. The Convention explicitly forbids discrimination on the grounds of sexuality.
The reactionary face of the judicial establishment was shown to be changing in a recent case when a gay man was allowed to inherit a protected tenancy when his partner died.
Margaret Jago, personal investment technical advisor for Scottish Equitable, said: "Inter-spouse transfers are exempt from IHT, so on the first death there can be no tax and couples splitting capital can minimise their capital gains tax."
This is only possible between man and wife and so discriminates against all unmarried couples.
The inherent tensions might force the Government to make alterations. The definition of spouse might be expanded to incorporate gay couples. But Jago thinks the likely outcome will be the ending of free gifts and the raising of the minimum IHT amount from £231,000, profiting everyone equally.
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