LEGAL COMMENT: Shake-up of inheritance tax system promised by new government report
In January 2018, the Chancellor asked the OTS to carry out a review of the UK’s Inheritance Tax (‘IHT’) regime, covering a broad range of…
What is the report about?
In January 2018, the Chancellor asked the OTS to carry out a review of the UK’s Inheritance Tax (‘IHT’) regime, covering a broad range of administrative and technical aspects.
The First Report focusses on the administrative aspects of IHT, from the form filling process, the timescales for paying IHT liabilities and the guidance available from HM Revenue & Customs.
As the First Report makes clear on a number of occasions, less than 5% of estates each year are liable to IHT, and the total tax take represents less than 1% of the total tax raised by the Exchequer.
This is possibly an indication that reviewing the IHT regime is fairly low down the Government’s list of priorities at present.
What recommendations does the report make?
In essence, the First Report recommends moving to a ‘fully integrated digital system’, simplify the numerous IHT forms, improve online guidance and increase the time limit for IHT payments from 6 months to 12 months.
Whilst the 8 recommendations made in the First Report would, if eventually implemented, represent a welcome improvement to a complicated tax system, having read through the entire First Report it is clear that any major change is unlikely to happen for a long time.
What else does the report tell us?
Hidden amongst the information contained in the First Report are some very useful graphs that are used to illustrate some of the findings the OTS made.
The following graph shows that survey respondents spent on average 50 hours administering an estate when they had not instructed an adviser, which gives a good indication of the sheer volume of work to be carried out when administering even a relatively straightforward estate.