Fiscally foxed

Our client has asked us for inheritance tax advice. His and his wife’s estates consist of the house worth £800 000 and cash reserves of about £100 000.

They have wills leaving everything to each other. They have good pension income so there are no problems in that direction.

I have explained that on the face of it tax will be charged on the death of the survivor on £250 000 which is the difference between two nil-rate bands and the total estate of £900 000; not a very high percentage rate of tax on the estate total but nevertheless the client would like to try to avoid it.

I have explained that giving away the house as a potentially exempt transfer would need a seven-year period and would also need a market rent to be paid for continuing occupation with all the problems that that...