PBR – inheritance tax

It is proposed that any part of the nil rate band unused on the death of the first spouse will be transferrable to the surviving spouse, for use against that spouse's estate when they subsequently die. An equivalent rule applies to civil partners, but not to co-habiting couples. The rule will take effect for any surviving spouse who dies on, or after 9 October 2007.

The immediate availability of detailed guidance, and draft legislation, does rather support the government's claims that this proposal was being considered some while back, and that it has not been conjured up in response to the opposition announcements of a couple of weeks ago. The tone of the notes suggests that the proposal has an ancillary objective of sticking it to those elements of the legal and financial services sectors which have been so keen to take advantage of the media fuelled IHT panic. Whilst we would have very much preferred the cost of this measure to have been directed towards reliefs elsewhere, this change does look as though it will make a serious dent in the trade of the less scrupulous product floggers who have preyed on middle England in recent years, and this must be welcomed.