Chancellor Philip Hammond has written to the Office of Tax Simplification requesting a review of inheritance tax (IHT).
In a letter signed by the Chancellor, which describes both the levy and its regime as “particularly complex”, the office is asked to consider whether the system is fit for purpose, as well as assessing if any aspects could be made simpler.
It’s anticipated that the review will consider technical elements of the process such as when the tax is due and filing returns.
It may also look at the interaction between the wider inheritance tax framework and existing rules on gifts, assessing whether this distorts the way people make decisions in regard to investments or other transfers.
Commenting on the IHT review was Sarah Cole. The personal finance analyst from Hargreaves Lansdown stated: “Anyone who has ever wrestled with estate planning and inheritance tax can appreciate that the whole system can be a nightmare of complexity.
“The pension freedoms and the additional residence nil rate band may have reduced inheritance tax for many, but they have made things much more complicated rather than less, so it’s about time someone took a big red pen to the myriad of rules and regulations.”
Also sharing his thoughts on the review was Clive Ponder TEP. The Director of Countrywide Tax & Trusts Corporation Ltd, featured in the 2017/18 Law & Justice Parliamentary Review, stated: “IHT is a very complex tax, which few customers fully understand and really does require simplifying. I suspect what most of our clients would like is for the tax to be eliminated altogether but I suspect that is not going to happen. The Chancellor has done the next best thing for government and sent it to the Office of Tax Simplification which if the thickness of my tax books I order every year is anything to go by has done little since its creation in July 2010. I think the equivalent action in business is referred to as throwing the issue into the long grass.”
