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EU Human Rights Court Finds Against British Sisters In IHT Case

by Robert Lee, Tax-News.com, London

14 December 2006


Two elderly British sisters have lost their attempt to win the same inheritance tax rights as enjoyed by married couples and same sex couples in civil partnerships.

UK inheritance tax laws allow property to be passed onto a spouse or civil partner without them incurring IHT. However, the law does not extend such rights to siblings, meaning that either Joyce Burden, 88, and her sister Sybil, 80, who have lived together since birth on their family-owned farm, will be faced with an inheritance tax bill on their GBP875,000 house when the other dies. Each sister has made a will leaving all her property to the other.

The sisters fear that the surviving sibling could be forced to sell their home to pay the resulting inheritance tax bill, and took their case to the European Court of Human Rights in Strasbourg, arguing that UK law as it stands infringed on their property rights.

However, the court rejected their arguments in a tightly contested verdict, with the seven-judge panel voting four to three against the sisters. The British representative on the panel sided with the majority.

"In the circumstances of the case, the Court found that the United Kingdom could not be said to have exceeded the wide margin of appreciation afforded to it and that the difference of treatment for the purposes of the grant of inheritance tax exemptions was reasonably and objectively justified," the judgement stated.

Currently, inheritance tax in the UK is charged at a rate of 40% above a threshold of GBP285,000 (due to increase to GBP300,000 in 2007).


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