Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether she has made an assessment of the potential merits of introducing an additional allowance for divorced persons before inheritance tax is payable by their next of kin.

The estates of all individuals benefit from a £325,000 nil-rate band for inheritance tax. The residence nil-rate band is a further £175,000 and it is available to those passing on a qualifying residence on death to their direct descendants, such as children or grandchildren. This means qualifying estates, whether or not the deceased was married or single at the time of death, can pass on up to £500,000 in these circumstances.

A surviving spouse or civil partner is able to pass on up to £1 million in certain circumstances if the estate of the first spouse or civil partner did not use any of their nil-rate band or residence nil-rate band. This could be because all the assets were left to the surviving spouse or civil partner, and the exemption for transfers between spouses and civil partners applied.

Any unused nil-rate band or residence nil-rate band is not transferable between other individuals. However, the rules for all individuals mean that two divorced individuals can still pass on up to £500,000 each, and so up to £1 million in total, to their children without an inheritance tax liability because of these nil-rate bands.