Potentially changing the Inheritance Tax regime is big news at the moment and the past few weeks have provided some interesting developments.
As mentioned in a previous article, the Chancellor of the Exchequer has requested that the Office for Tax Simplification carry out a review of the Inheritance Tax regime. Soon after this, the Office of Tax Simplification provided a scoping document for the review.
On 27th April, the Office for Tax Simplification provided their call for evidence. This call comprises of two parts.
Firstly, there is an online survey aimed at the public directly to access the public’s practical experience or understanding of Inheritance Tax.
Secondly, the Office for Tax Simplification has also provided a set of consultation questions aimed at the public, professionals and business owners. These questions cover areas such as:
- Difficulties in completing IHT Forms
- Difficulties in administering an estate and completing probate
- Interacting between lifetime exemptions and reliefs, along with public understanding of these and suggestions for simplification
- Complexities relating to businesses and agricultural property
- Charitable gifting
The consultation also states that responders could provide other areas of complexity, such as the Residential Nil Rate Band and the treatment of trusts.
Both the online survey and consultation questions can be found below. Responses to both are required by the 8th June.
An independent thinktank, the Resolution Foundation, has produced their own report into Inheritance Tax, published on 2nd May.
They recommend that Inheritance Tax should be abolished entirely and replaced with what they call a Lifetime Receipt Tax.
This tax would always be paid by the beneficiaries rather than the estate. Each person would have their own tax allowance that they can inherit up to before they would need to pay tax; £125,000 rising with inflation is suggested. Tax would be payable above this allowance at 20% up to £500,000 and 30% on everything above that.
Lifetime gifts would also come under the remit of the tax, with the current £3000 per year allowance staying. The spousal exemption and charitable exemption would also remain.
There are also suggestions for amending the trust tax regime to be in line with the proposals, restricting to BPR, APR and the treatment of inherited pensions, and scrapping Capital Gains uplift on death for certain assets.
Their full report can be found on the link below.