Simplification of inheritance tax (IHT)
Jun 07, 2018
The Office of Tax Simplification (OTS) has been tasked with carrying out a review of Inheritance Tax (IHT) with a view to simplifying how the tax operates. The general consensus is that the current IHT system is over complicated and not up to scratch.
For all its complexity, IHT actually generates a relatively small amount of tax compared to Income Tax and National Insurance. So the OTS has launched a call for evidence, ending 8 June 2018, which asks for people’s experiences of dealing with the system, both from an administrative point of view and in actually paying the tax. For the first time ever the OTS has set up an online survey to collate responses, hoping to invite input from the lay public as well as professionals.
How might IHT be simplified?
Respondents have been asked to comment on current bug bears such as:
- The Probate Service won’t issue a grant until HMRC has received any IHT payments due
- The deadline for submitting IHT payments is within six months of death
- The administrative burden of completing IHT forms even when the value of the estate is below the nil-rate band and no IHT is due
- Complex lifetime gift rules
- Obtaining and paying for property valuations
- Complicated rules for business and agricultural property relief
A number of reliefs and exemptions that are currently available may well be withdrawn or simplified as a result of the review. The OTS expects to publish its report in the autumn of 2018, and any major changes to IHT are probably a year or so away. We will keep you updated, as it may be necessary to review your will and plans for passing on your business and estate when we see any new rules. In the meantime, if you have any queries please don’t hesitate to contact us.