British Sisters Lose European Court Tax Battle

Two sisters have lost their battle with the European Court to be exempt from paying inheritance tax when one of them dies.

Joyce Burden, 90 and Sybil, 82, from Marlborough, Wiltshire have been told by the Grand Chamber of the human rights courts in Strasbourg, that they were not judged unfairly under UK inheritance tax rules and that national governments were entitled to "some discretion" when deciding taxation arrangements.

The judging ruled that the absence of a "legally-binding agreement" between the applicants rendered their co-habitation "fundamentally different" to that or a married or civil partnership couple.

The sisters who have lived together all their lives are said to be "bitterly disappointed". The 15-2 ruling means that the surviving sister will have to sell their home to pay the 40% inheritance tax bill on her half of the value of the £875,000 property.

The sisters said in a statement that they are now "in a worrying and unsettling position of being unable to secure each other in our last few years" and "this is a day we hoped, as British citizens, we would never see".

Matthew Elliott, Chief Executive of the TaxPayers' Alliance said that inheritance tax is "an unjust and unfair levy that hits bereaved families when they are at their most vulnerable".

The siblings have been asking for recognition as a cohabiting couple, writing to the Chancellor of the Exchequer from 1976 before each Budget.

When the UK Civil Partnership Act of 2004 came into force, which recognises gay and lesbian couples for inheritance tax purposes, the sisters first appealed to the European Court of Human Rights.

They said the act violated their rights under Human Rights Convention articles which outlaw discrimination and guarantee the "protection of property".

The Burden sisters lost the case by a 4-3 majority of the panel of seven human rights judges.

If the sisters had won the case, UK laws would have had to change to give exemption to cohabiting couples, also enjoyed by married couples and civil partnerships.

Not everyone pays inheritance tax on death, it only applies if the taxable value of an estate when a person dies is about £312,000 although there are a number of exemptions to this.

(DS)