Review of Inheritance Tax
The Office of Tax Simplification has provided details of the scope of its review for the current Inheritance Tax system, and whether and how, it might be simplified.They have advised that this will include both administrative and technical questions, which will include:
1. The process around submitting IHT returns and paying any tax, including cases where it is clear from the outset that there will no tax to pay;
2. 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;
3. Other administrative and practical issues around routine estate planning, compliance and disclosure, including relevant aspects of probate procedure, in particular in relation to situations which commonly arise;
4. Complexities arising from the reliefs and their interaction with the wider tax framework;
5. The scale and impact of any distortions to tax payer’s 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;
6. The perception of the complexity of the IHT rules amongst tax payers, practitioners and industry bodies.
The Office of Tax Simplification has indicated that they will report back in the autumn of this year, so we shall have to wait and see their proposals.
Whilst this review is to be welcomed it remains to be seen whether positive change will happen.
In 2006 the rules relating to the taxation of trusts were changed, supposedly with the intention of making life simpler, but many within the profession would say the opposite outcome was achieved!
Whether or not positive changes are made, what is clear to me is that IHT is much higher on the agenda for the government and it may therefore be advisable to consider any planning to be undertaken sooner rather than later.
For advice on any area of Private Client law, please contact Richard Horwood.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.