‘Tax Day’ brings minor changes only
Apr 08, 2021
The Treasury normally issues a bundle of tax consultation documents on Budget Day. This year however, they chose to delay their publication until three weeks after the Budget. In advance of so-called ‘Tax Day’, the general expectation was that these consultation documents would include major changes to pension contributions, Capital Gains Tax and National Insurance for the self employed. Instead, Tax Day turned out to be a pretty tame affair for personal finance, and it appears that any significant announcements have once more been delayed.
The consultations focused more broadly on ways to cut down on tax avoidance schemes, ideas for modernising the tax administration system including the timing of tax bills, insurance cover for tax professionals, and changes to inheritance tax (IHT).
Reduction of red tape for IHT
There were some minor changes to IHT announced, although no substantial reforms. The Treasury has accepted a number of recommendations by the Office of Tax Simplification (OTS) to make IHT reporting more straightforward.
From 1 January 2022, over 90% of non-taxpaying estates each year will no longer have to complete HMRC forms to obtain a grant of probate after a loved one dies. The change applies to estates that fall below the main IHT threshold of up to £1m for the surviving partner. Currently, thousands of bereaved families are forced to complete complex inheritance tax forms, even when it is clear there is no inheritance tax to pay. IHT forms will still be required if the estate is of high value, the deceased lived outside the UK or more complex reliefs are being claimed.
In addition, there is currently temporary provision in place which means that those dealing with a trust or estate can provide an IHT return without requiring physical signatures from all those involved. Going forwards this will be made permanent.
The government will also consider introducing a new digital system for IHT and probate reporting.
Business rates review
Among the documents published was also an interim report on the government’s Fundamental Review of Business Rates, which sets out a summary of responses to last year’s call for evidence. The final report will be published in the autumn.
Please get in touch if you have any queries about the changes to IHT or any of the other consultation documents.