Grandmother campaigns for changes to inheritance tax rules

A grandmother is campaigning for a change to the law after her orphaned grandchildren were charged £50,000 in taxes following the death of their parents.

In a story on the BBC website, Pauline Mitchell’s daughter, Becky, died from her injuries seven months after a car crash which killed her partner, Adrian Beaumont. The grandmother wants the law changed to that children under 18 have the same legal status as spouses. Her Majesty’s Revenue and Customs said it could not make an exception for minors.

The threshold for inheritance tax is currently £950,000 for spouses or civil partners if the estate includes the home. A standard inheritance tax of 40 percent is applied to estates over the £325,000 threshold, which was the case for Mrs Mitchell’s daughter. The tax was taken from her £130,000 death in service payment.

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Money increased the value of the estate

Mrs Mitchell said that if Adrian had survived the accident on the M5, the money would have gone to him and not been taxed. Because he’d predeceased her daughter, the money had to go to the estate pushing its value above the £325,000 level and liable for taxation.

She added that the move seemed unfair on her grandchildren and that the law should be changed so that when dependent minors are the beneficiaries to an estate, inheritance tax does not apply.

Mrs Mitchell said she and Mr Beaumont’s family were planning to campaign on the issue and petition for a debate in the House of Commons.

Under 18s dependent on parents

Pointing out that it was rare for both parents to die, she argued the move wouldn’t cost HMRC much, and that those under 18 were usually dependent on their parents.

Darren Jones, Mrs Mitchell’s local MP for her area in Bristol North West has written to the Treasury on the children’s behalf. He said their reply “essentially said no”. But he added there was provision for exemptions, and Mrs Mitchell’s grandchildren represented a unique and sad situation that wouldn’t happen all that often. He will be helping Mrs Mitchell to pursue the case through legal means if that is what she decides.

The tax has already been paid, but Mrs Mitchell said she wanted to help others who might find themselves in the same situation in the future.

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