Inheritance Tax in for an Overhaul?
The Office for Tax Simplification (OTS) has been tasked by government to review key aspects of the inheritance tax (IHT) legislation.
According to information posted to the government’s website recently, the review would appear to be wide ranging. Issues to be examined include:
- The process around submitting IHT returns and paying any tax, including cases where it is clear from the outset that there will be no tax to pay;
- The various gifts rules including the annual threshold for gifts, small gifts and normal expenditure out of income as well as their interaction with each other and the wider IHT framework;
- Other administrative and practical issues around routine estate planning, compliance and disclosure, including relevant aspects of probate procedure, in relation to situations which commonly arise;
- Complexities arising from the reliefs and their interaction with the wider tax framework;
- The scale and impact of any distortions to taxpayers’ decisions, investments, asset prices or the timing of transactions because of the IHT rules, relevant aspects of the taxation of trusts, or interactions with other taxes such as capital gains tax; and
- The perception of the complexity of the IHT rules amongst taxpayers, practitioners and industry bodies.
We will be keeping a keen eye on the outcome of these deliberations as they could turn even the most basic IHT planning on its head. We will keep readers informed when the OTS publishes its report although it may be some time before any changes are enacted and have a direct impact on estate planning. The OTS doesn’t envisage publishing its initial report until the Autumn of this year.