Battling sisters challenge unfair inheritance tax

Nottingham solicitor Vicky Newman believes the plight of two hard working elderly spinsters who fear losing their home shows why an unfair inheritance tax system must be reformed.

The might of the British government will be challenged next Tuesday (September 12) by two elderly, spinster sisters who feel the time has come to take a stand against the injustice of inheritance tax.

The stakes are high. If the sisters lose their case in the European Court of Human Rights then one of them will eventually be evicted from her home through no fault of her own, unless you consider living an exemplary, frugal life to be a fault.

Joyce and Sybil Burden have lived together all their lives. Their home and the small farm around it in Wiltshire is worth an estimated £875,000. The problem facing the sisters is that when one of them dies, the other will have to sell up and move out to pay the costs of crippling inheritance tax.

They decided to appeal to the Court of Human Rights earlier this year when gay and lesbian couples who enter into civil partnerships were given the same rights as married couples so that the surviving partner doesn’t have to pay inheritance tax when the other one dies. Joyce, who is 88, and Sybil who is 80, want the same rights to be extended to family members who co-habit.

Sybil Burden has said that she feels looked down on as a second class citizen for being single. “Our father worked hard all his life for this house so why should it be taken away from his family?” That is a sentiment that will no doubt strike a chord with hard working families everywhere.

This sisters’ case seems even more just when they point out that they saved the state hundreds of thousands of pounds by looking after their elderly parents and two of their aunts for years before they died. They have never claimed any state benefits apart their old age pension.

Now, like thousands of other families, they feel they are being punished for working hard and saving their money. If they and their father had frittered away all their earnings then they wouldn’t be facing this problem.

This isn’t just a matter of principle. These women have every right to fear what will happen when one of them dies. The other, while well into her eighties, will not only have to cope with the loss of a sibling and life long companion; she will also have to cope with uprooting herself from her home and finding somewhere else to live. If a local council evicted an elderly council tenant in this way there would quite rightly be uproar, but when the government does it to a private home owner it’s deemed to be all right.

Anyone in favour of fair play must surely disapprove of such a system and sympathise with these two women. Why should they be punished because they never chose husbands and married? After all, they’ve worked just as hard and contributed as much as many married couples. The truth is that the inheritance tax system is crying out for reform.

Many critics, including the government’s former transport secretary Stephen Byers, believe it should be abolished altogether. According to a survey carried out for the BBC, 60 pc of people would like to see inheritance tax scrapped even if it meant paying more income tax. However, as it raises more than £3bn revenue each year Gordon Brown has already ruled out any chance of that.

A welcome compromise would be to raise the threshold at which tax is paid. It is currently only £285,000 with the government planning to raise that to £325,000 by 2010. However, the threshold would need to be £430,000 in order to keep pace with house inflation over the last ten years.

Rising property prices mean 30,000 families, most with estates worth less than £500,000, are now liable for the tax. Most homeowners with a house of little more than average price can expect to be liable for inheritance tax in the next 10 or 15 years.

It’s clear that inheritance tax is not only inherently unfair it also punishes the thrifty and hard-working.

Hopefully these two admirable ladies, Joyce and Sybil Burden, will win their case so that co-habiting family members get the same rights as married couples and civil partners. If so, it may just lead on to further reform to take thousands of ordinary families out of the inheritance tax trap altogether by raising the threshold at which it becomes payable.

Vicky Newman is a Solicitor within the Private Client Department at Andersons Solicitors in Nottingham, she can be contacted on 0115 988 6727 or email vnewman@andersonssolicitors.co.uk

We produce FREE monthly electronic newsletters including; Private Individual, Business and Employment Law. You can register for your copy online from our website
www.andersonssolicitors.co.uk or e-mail Carly Williams at cwilliams@andersonssolicitors.co.uk.