In January 2018, Chancellor Phillip Hammond commissioned the Office of Tax Simplification (OTS) to carry out an extensive review of the current Inheritance Tax (IHT) regime.
On 23 November 2018, the OTS released the first part of their review which focussed mainly on administration issues and extended to 82 pages in length.
The second part of the review will explore key technical and design issues of IHT and will be published in Spring 2019.
Over 3,500 people responded to the OTS’ call for evidence and the majority found the current system to be too complicated and confusing. Although IHT is paid by less than 5% of all UK Estates, about 50% of the 570,000 people who die in the UK each year leave Estates which require the completion of IHT forms – which can extend to over 100 pages in length!
Nearly 40% of people responding, who had not used an advisor, stated that they spent over 50 hours administering an Estate and over 12% recall spending over 100 hours.
Administrative recommendations by the OTS included calls for the government to simplify the form filling exercise by digitalising the process – creating an online tool to help navigate people through the administration process.
The full report can be found here.
Part two of the review will consider areas of complexity within the IHT rules, including businesses and farms, lifetime gifts and the various reliefs and nil rate bands available – including Agricultural Property Relief and Business Property Relief.
We will be keeping a close eye on the government’s reaction to the review and also the second report due next Spring, which may affect current IHT planning arrangements for our high net worth clients, including landowners.