• Catherine Utley

Treasury refuses to help cohabiting siblings

Updated: Feb 11, 2019

10 February 2019

The government has told the senior Conservative peer, Alistair Lexden, that it will not change the inheritance tax rules to make them fair to adult long term cohabiting siblings.

In a letter to Lord Lexden, Mel Stride, the Financial Secretary to the Treasury, wrote: "The ability to defer inheritance tax until the death of the second partner, and transfer any unused thresholds to the surviving party, is reserved solely for married couples and civil partners. Whilst I appreciate the timing of the tax charge can cause issues for cohabiting siblings, the spousal exemption and spousal thresholds reflect the unique legal commitment that married couples and civil partners enter into."

Mr Stride's letter followed efforts by Lord Lexden to persuade the Treasury to allow long term cohabiting siblings to be treated in the same way as civil partners and married couples are for inheritance tax purposes, not least so that they do not have to lose their jointly owned home on the death of the first of them. Last year Lord Lexden tried to get the law changed to extend eligibility for civil partnerships themselves to long term cohabiting siblings. His private member's bill, which aimed to bring about the change, received strong support in the House of Lords from the Conservative and cross-benches, but was rejected by the government.

Responding to Mr Stride's letter, Lord Lexden, who is the official historian of the Conservative Party, said : "Mrs May's government has made many mistakes. Some of the most grievous have sprung from a failure to understand how traditional Conservative moral principles should be applied in Britain today to strengthen civil society at a time when it is under such serious strain". The decision to retain inheritance tax arrangements that discriminated against cohabiting siblings was another such mistake, he said.

"It is tragic that the government has still not understood that their family ties represent a precious social asset that the tax system must recognise".

Catherine and Virginia Utley: cohabiting siblings

Catherine Utley, who has lived with her sister for decades, said: "The continued discrimination against cohabiting siblings and other family members who choose to live together in adulthood causes anxiety for them in old age and great difficulty at a time when they are grieving. The government perfectly understands how important inheritance tax relief is to couples who share their lives. That is why it is soon to offer the relief to any two people - whether or not they choose to marry - so long as it thinks they are in what it coyly calls an 'intimate partner relationship'. They don't even have to live together to qualify! Why on earth should it think the relief is any less important to those who have lived together for decades - often a lifetime - in a jointly owned home, but whose ties are platonic rather than sexual? We will, of course, fight on, until this glaring injustice is rectified".

An explanation of how inheritance tax rules unfairly affect long term adult cohabiting family members can be found here