Paula Tallon, director of direct tax with Chiltern responds to accountants' queries.
Q: My client is a 68 year old widow who has been caring for her disabled nephew since her sister and brother-in-law died penniless a number of years ago. She would like to find an inheritance tax efficient way of providing for him. Are there any special provisions?
A: There is a specific IHT relief which could apply. A full Inheritance Tax exemption is available where a lifetime gift is made for the benefit of a 'dependent' relative. Where it applies there is no need for the donor to survive for seven years ' there is an immediate reduction in the value of the donor's estate.
Section 11(3) IHTA provides that:
"A disposition i...