Thousands of families face the prospect of being hit by a new inheritance tax blow after a key ruling by the Special Commissioners. 

The tribunal body judged that a family which had opened a discretionary will trust would be liable for a £60,000 IHT bill on the mother's £150,000 half-share of the property, on the grounds that she had not worked, had not contributed to the mortgage and had died first. 

Discretionary will trusts aim to ease the inheritance tax burden by splitting the value of a property between a husband and wife but the decision has sparked concerns that hundreds of thousands of families' plans to avoid the IHT millstone will be scuppered. 

 'The ruling devalues the contribution that the wife has made,' Grant Thornton's senior tax partner Mike Warburton told The Daily Telegraph. 

Warburton added: 'HM Revenue & Customs is saying that if you try to save inheritance tax by setting up a nil-rate band discretionary trust in this way, it is only going to work as long as the person who dies first has contributed the cash.' 

Further reading:

HMRC clarifies reach of new IHT charge 

Halifax Bank wants IHT threshold raised to ₤460,000

Raise revenue from CGT, says IoD