Brits desperately looking to avoid paying inheritance tax could marry their own mother-in-law to dodge Rachel Reeves‘ raid, financial experts have revealed.
Karen Dovaston, of Dovaston Law and chair of the Law Society’s Family Law Committee, told the Telegraph that a legal loophole presents a ‘window of opportunity’ for people to pass their wealth on to their children without paying tax.
This surprising development followed a reader’s comment to the outlet describing his ‘cunning plan’ to sidestep paying inheritance tax ‘while also enhancing the value of my mother-in-law’ by marrying her.
‘The plan is to divorce my wife and marry her elderly divorced mother. When my new wife/ex mother-in-law passes away, I would be able to inherit her estate tax-free,’ reader Andrew wrote.
‘I could then gift my newly inherited assets to my first wife, or our children, in the hope and expectation that I won’t myself pass away within seven years’.
While estates currently pay 40 per cent tax on assets worth more than £325,000, partners inherit their spouse’s wealth without paying tax on it.
Marrying your partner’s single mother, therefore, would allow you to inherit her assets without paying a penny, Ms Dovaston said.
Ian Cook, of Quilter, a wealth manager, told the outlet that as a financial adviser, he could now ‘potentially be recommending marriage as part of my financial plans because anybody’s who’s unmarried at the point of death doesn’t get that spousal exemption’.
Britons have only been legally allowed to marry their mother-in-law since 2007, and some have already made the most of the change – for financial reasons or romance.
Clive Blunden, from Warrington, Cheshire, made history when he became the first man in 500 years to marry his mother-in-law, Brenda, in 2007, after campaigning to see a change to the law.
The happy couple tied the knot 18 years after they began dating and 22 since he divorced from his then-partner Irene Little.
Clive and Brenda Blunden, from Warrington, Cheshire, in 2007
Irene Little from Irlam, Salford, whose ex husband Clive married her mother Brenda in 2007
Clive, left, made history when he became the first man in 500 years to marry his mother-in-law
The 2007 change to the law, allowing people to marry their mother-in-laws, followed a long campaign by Clive Blunden.
Clive, from Warrington, Cheshire, was arrested in 1997 and faced up to seven years in prison for ‘lawful impediment’ after the pair announced their plans to marry.
But a 2005 ruling from the European Court of Human Rights paved the way for Clive and Brenda to marry after dating for some 30 years.
Clive’s ex-wife, Irene Little, did not attend the wedding and previously said she felt her mother ‘totally betrayed’ her.
Clive said in 2020: ‘People thought we wouldn’t last but we are stronger than ever.
‘We’re together 24/7 and there’s a magic to it.’
Brenda added: ‘Clive is a gentleman and he looks after me. I can get a bit argumentative but he quietens me down.’
Thanks to the law, people can now also marry their mother-in-laws to circumvent certain rules on paying inheritance tax.
Rachel Reeves on board a train to Leeds, and in interview with the Mail’s Jason Groves, Friday
Keir Starmer speaks to staff during a visit to Hitachi in Newton Aycliffe, on December 6
Couples who are married or in civil partnerships can combine their allowances to pass on £650,000.
But any money or assets left to a spouse or civil partner is exempt.
Labour has been under fire in recent weeks for an inheritance tax raid that experts warn will devastate family-run companies and farms.
Analysis has found that the introduction of death duties on the assets of family-owned firms could lead to as many as 125,678 job losses over the next five years among mostly small businesses and reduce economic activity by £9.4billion.
A survey carried out by the consultancy also finds that one in five family firms expects to have to take action to avoid the new Inheritance Tax liability of 20 per cent on assets worth more than £1million.
As many as 15 per cent who expect to be hit now say they will sell up completely, while even those below the threshold plan to reduce investment or cut jobs.
Inheritance tax bills are generally expected to rise after the Chancellor determined that unused pensions would be considered part of an estate from 2027.
Tens of thousands of grieving families face a new death duty on pensions and will be dragged into paying the dreaded 40 per cent charge for the first time.
The Treasury will rake in more than £3.4 billion from pension pots in the form of inheritance taxes by 2030, official forecasts reveal.
Currently, private and workplace pension funds do not form part of your estate upon death and have not been liable for inheritance tax.
Pension experts have warned the reform will throw years of succession planning into disarray and many savers will be forced to overhaul their plans for passing wealth down to the next generation in order to shield their retirement pots from the taxman.
Baroness Ros Altmann, a former pensions minister, warned that the move will penalise younger generations and undermine future pension prospects.
She said: ‘Taking away the ability for savers to pass on their funds as a pension for their offspring is a really bad decision, in my view.
Pensioners will be encouraged to spend their pension while still relatively young, leaving much less to live on if they survive to older age.’
