Gay Relationships: Inheritance Tax Laws (Hansard, 28 February 2000)

§ Lord McIntosh of Haringey
My Lords, we are committed to fairness in taxation, and the Chancellor of the Exchequer keeps all aspects of the tax system under review.

§ Baroness Rendell of Babergh
My Lords, I am grateful to my noble friend for that reply. Is he aware that at present the partner in a gay relationship with a higher earning capacity may be obliged to take out costly life insurance to cover inheritance tax that is payable by the surviving partner? Can my noble friend also tell the House whether gay couples are likely to be granted the same rights as married couples to designate next of kin and make decisions on the medical treatment of an incapacitated partner?

§ Lord McIntosh of Haringey
My Lords, I am grateful to my noble friend for being grateful for what I thought was a rather unhelpful Answer. My noble friend is right that the inheritance tax laws in this country discriminate in favour of married couples and against unmarried couples, whether of the same sex or heterosexual. Whether changes should be made to inheritance tax is a very much wider question than the issue of same sex couples. As to the second matter raised by my noble friend, I can be a little more encouraging. The Lord Chancellor's Department believes it should be possible to name next of kin, for example when somebody goes into hospital, on the basis of the person whom the patient wishes to designate rather than a blood relationship. When there is parliamentary time available that will be made possible. In other words, the situation should be comparable with the existing rules on enduring power of attorney where it is possible for an individual to designate somebody else regardless of relationship.

§ Lord Boardman
My Lords, is it not right that those who escape moral and legal obligations by not entering into marriage should not be entitled to the privileges which are rightly granted to married couples?

§ Lord McIntosh of Haringey
My Lords, I do not accept that those who do not marry escape moral obligations. Taxes are about raising money, not about being for or against particular lifestyles.

§ Earl Russell
My Lords, without asking the Minister to anticipate anything that may be decided by his right honourable friend the Chancellor of the Exchequer, does he agree with his right honourable and noble friends at the Department of Social Security that it is important to encourage private provision for retirement where that is financially appropriate? In the light of that, does the noble Lord agree that, if two law-abiding citizens who live in a single household wish to provide for each other's retirement, it is in the interests of the Treasury and the taxpayer to allow them to do so?

§ Lord McIntosh of Haringey
My Lords, the noble Earl has extended perfectly legitimately the scope of the Question from inheritance tax. My answer to him, as to my noble friend who asked about insurance, is that nothing in our laws discriminates against same sex couples as opposed to couples of different sexes.
The Question relates specifically to inheritance tax. The lower threshold for the payment of inheritance tax is an estate of £231,000. A large proportion of couples will not be above that threshold.

§ Lord Stoddart of Swindon
My Lords, does the Minister agree that it is an extremely difficult Question? The mind boggles at its implications. For example, why should couples living in a homosexual relationship have preference over two males or two females who live in a platonic relationship? Although they are not living in a homosexual relationship, in order to gain some relief from inheritance tax they might declare that they are homosexuals. If two brothers or a brother and a sister declared that they were living in a sexual relationship in order to gain benefit from the inheritance tax, they would be pleading guilty in advance of a court hearing to committing a criminal act.

§ Lord McIntosh of Haringey
My Lords, I very much fear that my noble friend has a dirty mind.

§ Lord Stoddart of Swindon
My Lords, I simply cannot accept that implication. I have been accused of having a dirty mind and I take that very seriously indeed. Noble Lords may laugh, but I do not have a dirty mind; in fact, I have a particularly clean mind. I hope, therefore, that my noble friend will withdraw that remark, whether he made it in jest or otherwise.

§ Lord McIntosh of Haringey
My Lords, if my noble friend is offended, of course I withdraw my remark. Some people think that a dirty mind is a perpetual feast.
322 As regards his specific question, no preference is being suggested for homosexual couples. It was not suggested by my noble friend Lady Rendell. My noble friend asked for a wider extension of the rules for inheritance taxes than for married couples as at present. There is no question of preference there.

§ Baroness Gardner of Parkes
My Lords, I believe that the point raised by the noble Baroness relates to the marital home or the home in which the two people live. Will the Minister accept that there are two answers. First, any person living with another—whether brother, sister, father, child or whoever—should have the right to nominate one person to continue living in the family home. That would avoid all discrimination. The second would be to adopt the Australian system and abolish inheritance tax.

§ Lord McIntosh of Haringey
My Lords, the noble Baroness raises an important question which has been tested in the courts. In the case of Fitzpatrick v. Stirling Housing Association Limited it was found that it should be possible to pass on a tenancy other than to a legal spouse. As a result, the Department of the Environment, Transport and the Regions has issued advice to local authorities and to the housing corporation on behalf of housing associations that they should permit a designated succession of tenancy pending legislation, whenever that can take place.

§ Baroness David
My Lords, if inheritance tax is to be looked at, could the situation of a son or daughter who has cared for an aged parent be considered? He or she sometimes does not have the benefit of the property being passed on without tax. It is an important point.

§ Lord McIntosh of Haringey
My Lords, by her question my noble friend illustrates the difficulty of considering inheritance tax. Inheritance tax is indeed being considered. All taxes are looked at all the time. However, the problem which my noble friend raises is one of the many considerations for the Chancellor and Ministers when they carry out a review.

§ Lord Saatchi
My Lords, does not the Minister's reply point up a problem for the Government? They want to modernise everything but never think through what it means. The Government say that they want to repeal Section 28. They say that they want to equalise the age of consent. They say that there should be no discrimination against people on the ground of sex. If that is what the Government believe, is not the logic of their position that they should now equalise the tax treatment of gay couples by allowing gay couples to marry?

§ Lord McIntosh of Haringey
My Lords, again the noble Lord raises an important question. The issue of civil marriages for gay couples has been raised recently in France with the tax law. Many people in this country have a lot of sympathy with that. It goes a great deal wider than same sex civil marriages. One 323 proceeds as best one can to make the changes that one can make consistent with the views of the people of this country.

§ Lord Pearson of Rannoch
My Lords, can the Minister tell the House the value each year of inheritance tax to the Exchequer? Approximately how much are we talking about?

§ Lord McIntosh of Haringey
My Lords, I should be able to tell the noble Lord. I am unable to do so. I shall write to him. It is a considerable amount of money, although it applies to a relatively small number of people.

§ Lord Alli
My Lords, will the Minister press his right honourable friend the Chancellor of the Exchequer on this matter? First, I declare a personal interest.
Many noble Lords will have known Lord Montague who died in this Chamber some months ago. Some of your Lordships will be aware that he had a partner, Takashi, of some 35 years' standing. However, perhaps few noble Lords realise that in addition to the grief and pain of losing Michael, Takashi is now being forced to sell the home in which they lived in order to pay inheritance tax. The testing of such cases of long-lasting relationships cries out for the law to be changed.

§ Lord McIntosh of Haringey
My Lords, my noble friend does well to remind us of the specific case of our dear friend Lord Montague. Because the benefit inheritance tax affords to the surviving spouses has been so wide, historically the definition has been particularly narrow. My noble friend may well be right in thinking that a change has to take place. However, it may have to take place with respect to the generosity of relief as well as to the extent of the availability. That is the balance which has to be taken into account.