Abstract
Two elderly sisters who lived together complained of discrimination on the ground that, when one of them died, the other would face a heavy inheritance tax bill, unlike the survivor of a marriage or civil partnership who enjoys a “spousal exemption” under the Inheritance Tax Act 1984. They lost in both the lower chamber of the European Court of Human Rights and on appeal to the Grand Chamber. At first instance, discrimination was found but held to be proportionate and justifiable; in the Grand Chamber, no discrimination was found, as siblings and spouses/civil partners were held not to be in an analogous situation. As an attempt to avoid a tax borne only by the comparatively wealthy, this case might not naturally engage feminist sympathies. But it demonstrates how unworthy claims can produce positive results by drawing attention to society’s dismissive treatment of old people and calling into question the legal and economic privileges enjoyed by legally-bound couples at the expense of everyone else.
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Notes
SI 2005/3229, as allowed by s 103 of the Finance Act 2005 (Lee 2007, p. 685).
CPA Schedule 1.
Jacqui Smith, MP, quoted in Burden v United Kingdom (2007) 44 EHRR 51 (ECtHR) at para 19.
The UK government also tried unsuccessfully to have the complaint declared inadmissible on various grounds. The arguments on admissibility took up almost as much space as the substantive issues, but as they have no bearing on feminist concerns I shall not deal with them here.
Burden v United Kingdom (2007) 44 EHRR 51 at para 47.
Ibid at para 48. The Burden case was heard in the European Court some months before tax (first inheritance tax, then income tax) became a consuming problem for the government, and it is not fanciful to suggest that the case helped fuel public criticism.
Ibid at para 50.
Ibid at paras 60–61.
Ibid, dissenting opinion of Judges Bonello and Garlicki at para 3.
Ibid at para 4.
Ibid, dissenting opinion of Judge Pavlovschi.
Burden v United Kingdom (2008) 47 EHRR 38 (Grand Chamber) at para 62.
Shackell v United Kingdom (dec.) (Application no. 45851/99), 27 April 2000.
Burden v United Kingdom (2008) 47 EHRR 38 at para 65.
Ibid at para 66.
Ibid, concurring opinion of Judge Bratza.
Ibid, concurring opinion of Judge David Thor Bjorgvinsson.
Ibid, dissenting opinion of Judge Zupancic.
Ibid, dissenting opinion of Judge Borrego Borrego.
Of course, the very expression “the family home” is emotive.
If the sisters’ shared property was worth £1,525,000 and owned in equal shares, then each sister’s portion would be worth £762,500 (or probably less, as allowance is made for the fact that half a house is not really worth half the value of a whole house). If one subtracts the (then) nil rate band of £285,000, the survivor would be liable for a 40% tax on the difference—that is, 40% of £477,500, or £191,000.
Several press accounts assumed that the sisters’ house was worth the full £875,000 rather than this being the sum of the house plus the thirty acres of land (e.g. Rozenberg 2006). Others ignored the rest of their property and thereby undervalued the tax bill: for example, the Daily Mail report stated it would be £61,000 but repeated the error that the “family home” would have to be sold (Slack and Salkeld 2006).
Which may explain why the inheritance tax exemption was omitted from the Act, only to be added later by means of a regulation.
The Burdens told the press that, each year from 1976 before the Budget, they sent a letter to the Chancellor for the Exchequer asking for inheritance tax reforms for siblings like themselves. Nothing transpired so, in March 2005, inspired by the passing of the CPA, they addressed the European Court of Human Rights directly: “In desperation we write to you, for, as second-class citizens, we seek justice against the unfair laws we live with in the British Isles” (Bale 2006). Somewhat to their surprise, their case was accepted. The UK government was also taken by surprise, and asked for a 3-month postponement of the hearing in order to prepare its defence.
While this would secure their assets, it would seem a counter-productive move if the object was to retain the family home for the surviving sister to continue to live in.
A BBC poll in 2006 found that 40% of respondents had considered the impact of inheritance tax on their own position (Lee 2007, p. 689).
UK house prices increased by an average of 65% in the years 2002–2007, though the increase was much larger in some areas like London and the South-East. Meanwhile the nil rate band only went up by 14% (Lee 2007, p. 679). Of course, the substantial fall in property values since the “credit crunch” of 2008 has led to an almost total disappearance of public interest in the inheritance tax issue as more and more people fall outside its ambit.
The Tories initially met the criticisms of the tax with a promise to raise the nil rate band to £1 million. Ironically, the Labour solution effectively doubled the existing band of £300,000 for married couples and civil partners and, at a stroke, also doubled the Burden sisters’ grievance—whereas the Conservative Party’s plan would probably have satisfied them.
Wilkinson v Kitzinger [2006] EWHC 2022 (Fam) at para 118.
The Tories, nervous at appearing not to support marriage, subsequently followed the Labour lead and proposed allowing spouses and civil partners to pass their unused nil rate allowance (of £1 million!) to the surviving partner.
Burden v United Kingdom (2007) 44 EHRR 51 at para 55.
Burden v United Kingdom (2008) 47 EHRR 38 at para 57.
Lord Lester, whose private member’s Bill proposing civil partnerships prompted the government’s CPA, is looking to copy the kinds of “opt-in” or “fallback with opt-out” schemes already existing in some jurisdictions abroad. See, for example, the Property (Relationships) Act 1984 of New South Wales, the Relationships Act 1993 of Tasmania, and the Domestic Relationships Act 1994 of the Australian Capital Territory.
References
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Acknowledgements
I should like to thank Emily Haslam for her helpful comments and to acknowledge Anne Griffiths’s paper on this case and the ensuing discussion by participants at the Caring and Sharing in Domestic Relationships Workshop at the International Institute for the Sociology of Law in Onati, April 2007; also participants in the Beyond Critique panel at the Law and Society Association’s Annual Meeting in Montreal, May 2008; and participants at the Gender and Law Working Group of the Research Committee on the Sociology of Law who met at the Milan Conference, July 2008. The views expressed in this case note are, however, my own.
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Auchmuty, R. Beyond Couples. Fem Leg Stud 17, 205–218 (2009). https://doi.org/10.1007/s10691-009-9121-x
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DOI: https://doi.org/10.1007/s10691-009-9121-x