A second report reviewing Inheritance Tax (IHT) has been published by the Office of Tax Simplification (OTS). The 103-page report is entitled ‘Simplifying the design of Inheritance Tax’ and follows the first report, published in November 2018, which focused on forms, administration and guidance.
Key areas
The report covers three key areas: lifetime gifts, the interaction of IHT with Capital Gains Tax (CGT) and reliefs available to businesses and farms. There are a total of 11 recommendations which the OTS believe would make IHT easier to understand. The four recommendations which specifically relate to lifetime gifts aim to streamline gift exemptions and make gifting simpler and more intuitive.
Double whammy
The OTS has acknowledged that IHT appears to be ‘almost uniquely unpopular’ and raises strong emotions amongst the public. This could be because people consider it to be a form of double taxation and a wealth transfer tax aimed at those who have worked hard to save for their old age. When recently questioned about the tax, the Chancellor Sajid Javid commented that there was “a real issue” around IHT. The Treasury, who commissioned the report, is due to respond to the recommendations in due course and we will keep you updated on any developments.
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