The Office of Tax Simplification has been tasked by the Chancellor to make Inheritance Tax (IHT) simpler and more streamlined, and to review the rules on gifting, pensions and property. Recommendations are due to be announced shortly.
In a recent consultation, more than 3,500 people were asked their views on IHT, and their verdict was that it was uniquely unpopular and complex in its operation. IHT raised £5.2bn in 2017. This figure is expected to be £6.9bn by 2023-24.
Who pays the tax?
Although IHT, where due, is currently charged at 40%, allowances, spouse and civil partner exemptions and available reliefs mean that the actual rate payable is less. Figures show that estates with a net value of less than £1m paid inheritance tax at 5%, whilst estates worth between £3m and £7m paid 20%. Estates valued at £10m or more paid tax at 10%, an indication that those with large estates are more likely to seek professional advice about making lifetime gifts and setting up trusts to lessen the impact of the tax.