Experts Say Elements Of The Report Will Be Seen As Controversial And Radical
The Office of Tax Simplification (OTS) has published its second report making recommendations of how to make inheritance tax simpler and easier to understand for taxpayers.
The report, titled OTS Inheritance Tax review: Simplifying the design of the tax, makes several recommendations about changes to inheritance tax which experts at Irwin Mitchell suggest could be seen as controversial and radical.
The OTS is the independent adviser to government on simplifying the UK tax system. It makes recommendations for the government to consider but does not implement any changes directly.
Specialist inheritance tax lawyers at Irwin Mitchell who have seen the latest report say that while there is good news in some sensible and well thought through ideas, some details of the recommendations would need further investigation.
Expert Opinion“This review of inheritance tax was long overdue and the OTS has produced some very interesting, and in some cases, radical proposals.
“Sensibly they have a suggested a number of ‘packages’ of reforms that need implementing together rather than being cherry picked which mean that any knock on effects of individual changes are managed properly.
“For example changes to the lifetime gifts rules, reducing the survivorship period to five years, taking away the much misunderstood taper relief, and the complex way that gifts going back 14 years can be taken into account for trusts, is sensible.
“There are also two significant, radical changes for businesses and farms which will be seen as controversial and potentially could have a major effect on many family business and farm owners.
“The proposals mean, firstly, you would lose the capital gains tax uplift on death if you get agricultural property relief or business property relief. This is designed to encourage the passing on of businesses and farms during a lifetime, but any changes in this area would need very careful consideration.
“Likewise a suggestion that the threshold level of business activity to secure business relief should be the same as for CGT, that much higher than currently for IHT, which could mean many businesses need to be sold, in whole or part to pay the larger amount of tax due, after a death.
“As with all significant tax changes, there would be winners and losers, and we hope that HMRC will consult widely so that any unforeseen consequences can be fully considered.
“We will now be considering the potential impact of the recommendations further.” Helen Clarke - Partner