The European Court of Human Rights ruled that the UK had not exceeded the wide margin of appreciation afforded to it where the difference in treatment of spouses and civil partners, on the one hand, and unmarried siblings on the other, for the purposes of granting inheritance tax exemptions, was reasonably and objectively justified for the purposes of art. 14 of the European Convention on Human Rights.Accordingly, there had been no violation of the taxpayers' human rights.

Facts

The applicant taxpayers were unmarried sisters, born in 1918 and 1925 respectively. They had lived together all their lives; for the last 30 years in a house built on land inherited from their parents. The house was owned by the taxpayers in joint names. According to an expert valuation, the property was worth £875,000.

Each taxpayer, in addition to her £437,500 joint share in the house, owned investments and other property worth over £150,000. Each sister made a will leaving all her property to the other.

The taxpayers submitted that the value of the house had increased to the point that each sister's one-half share was worth more than the current exemption threshold for inheritance tax (IHT) and that the survivor might have to sell the house in order to pay inheritance tax. As their situation was analogous to civil partners, their rights under the European Convention on Human Rights had been infringed since the domestic law did not afford them the IHT exemption available to spouses and civil partners.

Issue

Whether the taxpayers' Convention rights had been violated.

Decision

The European Court of Human Rights (Grand Chamber) (dismissing the appeal by a majority of 15 to 2) considered that, as with marriage, the legal consequences of civil partnership under the Civil Partnership Act 2004, which couples expressly and deliberately decided to incur, set those types of relationship apart from other forms of co-habitation.

Rather than the length or the supportive nature of the relationship, what was determinative was the existence of a public undertaking, carrying with it a body of rights and obligations of a contractual nature. Just as there could be no analogy between married and Civil Partnership Act couples, on one hand, and heterosexual or homosexual couples who chose to live together but not to become husband and wife or civil partners, on the other hand, the absence of such a legally binding agreement between the applicants rendered their relationship of co-habitation, despite its long duration, fundamentally different to that of a married or civil partnership couple.

That view was unaffected by the fact that different rules of succession had been adopted in the 47 European countries which were members of the Council of Europe. Different countries had similarly adopted different policies regarding inheritance tax exemptions to the various categories of survivor; states, in principle, remaining free to devise different rules in the field of taxation policy.

European Court of Human Rights (Grand Chamber).
Judgment delivered 29 April 2008.