Earlier this year, the Office of Tax Simplification (OTS) was charged by the Chancellor of the Exchequer to carry out a review of several different aspects of Inheritance Tax (IHT).
The review’s scoping document noted that currently less than 5% of estates are liable to IHT, but there has been an increase in the number of people who think they may be within the scope of tax, particularly as a result of a rise in the value of many residential properties.
The review’s remit included a consideration of how key aspects of the current IHT system work and whether and how they might be simplified, including:
- 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 rules relating to gifts, 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;
- Complexities arising from the reliefs and their interaction with the wider tax framework;
- The perception of the complexity of the IHT rules amongst taxpayers, practitioners and industry bodies.
To inform this review, the OTS published a call for evidence and an on-line survey to gather information about people’s experiences and perceptions of IHT. In particular it was looking at the existing legislative framework, and the administrative processes through which taxpayers interact with HMRC in relation to IHT.
This consultation exercise has now closed, and the OTS is expected to publish its report in the Autumn.
IHT is a complex tax with a myriad of rates, reliefs and exemptions available. It will be interesting to see whether this exercise results in any meaningful changes. Certainly, simplification of the current regime would be welcome. Whatever the result, we shall continue to use our specialist knowledge to guide our clients regarding their IHT position and, in particular, options to mitigate a potential liability to IHT and increase the value of one’s estate available to pass to beneficiaries.
Specialist Estate Planning Lawyers, Edinburgh
Our personal, attentive service coupled with sage, astute and commercially-minded guidance allows us to build long-term, ongoing relationships with our clients, helping them protect assets through generations. We clearly outline the implications from initial contact, helping to dispel the mystery behind the law and legal process. For more information, please contact us today.
Contains public sector information licensed under the Open Government Licence v3.0.