LITRG: Tax quirk is hitting the elderly
21 January 2010
A number of elderly people are missing out on 'transferable nil rate band' inheritance tax due to a quirk in the system, according to the Low Income Tax Reform Group (LITRG).
The organisation has now called on the government to correct the quirk, which affects elderly people who lost their husband or wife before March 1972, to allow inheritance tax allowance to pass to a spouse when one of the couple dies.
According to LITRG, this could effectively double the amount they can pass on tax free when they die.
John Whiting of LITRG, who is also tax policy director of the Chartered Institute of Taxation, said: "The change needed here is simple, would cost a very small amount and would remove tarnish from an enlightened and sensible tax measure. Why can't that change be made?"
Fears over not being able to provide for their loved ones may see a number of elderly people seeking to gain access to money they have tied up in property assets.
Plans such as equity release schemes can give homeowners a welcome financial boost with funds drawn from the value of their property.