Gay rights campaigners are threatening to reduce the UK's inheritance tax regime to rubble by demanding equal transfer rights for thousands of unmarried couples in the wake of new human rights legislation.
The introduction of the Human Rights Act, which incorporates the European Convention on Human Rights into UK law in October, could force the Government into a major rethink or risk hazardous legal action.
Gay groups Stonewall and Outrage say the law means the exemption must be applied to both same sex and unmarried heterosexual couples.
Under current legislation when a husband or wife dies their entire estate can pass to the remaining spouse without paying IHT. Unmarried taxpayers do not enjoy the privilege.
The exemption is already under scrutiny following a House of Lords precedent set in the case of Fitzpatrick v Sterling Housing Association last year recognising gay couples should have the same rights as married couples.
The Treasury says the Government doesn't currently have plans to treat heterosexual couples outside marriage or same sex couples as equivalent to married couples for IHT.
But Stonewall spokesperson Laura Willoughby says: “In October when the Human Rights Act comes in, we anticipate action will be taken under it.”
And Outrage says the IHT rules should apply to any couple, married or not.
Scottish Equitable personal investment manager Richard Leeson says: “There are a large number of IHT avoidance schemes which rely upon the spouse exemption. IFAs will wish to look carefully at these.”