Pre Budget Report 2007 - Inheritance Tax
Any assets passing on death to a spouse or civil partner normally qualify for spouse exemption and no inheritance tax is payable. However, each individual is entitled to a nil rate band allowance (currently £300,000) and, essentially in this scenario, the nil rate band on the first death goes unused. With the use of tax planning Wills, there have been various ways in which the first nil rate band could be rescued.
The proposal is that the unused amount of the individual nil rate band will now pass to the survivor spouse. This provides a real opportunity for the family in considering the estate of anyone who dies after 9 October 2007 and who was widowed since 18 March 1986. It is possible that there will be up to two nil rate bands to set against the estate.
This is retrospective and is likely to be helpful in both lifetime and post-death planning.
