Tallon's Tax Tips No 3: Widow's inheritance tax dilemma

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.

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