- 1. The Scope of the Book: Estate Planning Introduced
- 4. Trusts: Tax-Efficient Management
- 6. The Family Business
- 6.1.3 Capital Gains Tax angles
- 6.3.2 The detail of the legislation
- 6.5.2 The scope of employment income for Income Tax and National Insurance purposes
- 9. Investments
- 10. Life Assurance
- 11. Pensions
- 12. Charitable Giving
- 15. Leaving the UK
- 15.2.4 Occasional residence abroad not enough
- 15.2.8 HMRC’s proposals for a comprehensive statutory test for residence from 2012/13, deferred to 2013/14
- 16. Non-UK Domiciliaries Living in the UK
- 18. Wills
Chapter: 2 - Inheritance Tax Mitigation: The Basics
The spouse/civil partner exemption
2.2.3
The exemption is unlimited except where the donor is UK domiciled and the donee is or is deemed to be non-UK domiciled, in which case there is the (rather odd) historic limitation to £55,000, on a lifetime basis (IHTA 1984 s18). The days of this £55,000 limitation in a case where the transferee spouse is EU domiciled may be numbered following a consultation launched by the European Commission in June 2010 (‘Inheritance Tax Hinders Freedom of Movement’). See 13.2 and, for domicile, 15.3 and 16.4.
As to transfers between spouses/civil partners, it has been traditionally axiomatic that on death (and you never know who is going to go first) each individual should own at least £325,000 (for 2011/12) of chargeable value to pass to a beneficiary other than the survivor. This can be achieved by careful Will drafting – see Chapter 18. Otherwise the wastage of the exemption could cost up to £130,000 (40% of the nil-rate band for 2011/12). However, the advent of the transferable nil-rate band from 9 October 2007 (see 18.4.3) has made this unnecessary – and indeed, in the usual case, perhaps ill-advised.


