The Chancellor of the Exchequer, Philip Hammond, wrote to the Office of Tax Simplification (OTS) in January instructing a review of the inheritance tax system. The OTS has, in the last few days, published its scoping document for that process.
Jamie Younger, a partner at Saffery Champness and a member of the firm’s Landed Estates Groups, comments:
“We have been anticipating this review for some time and, whilst inheritance tax only applies still to a small percentage of taxpayers, at around 5%, clearly those owning land and property are likely to be affected – hence its particular relevance to the farming and landed estates sectors.”
In its scoping document, the OTS says that the overall aim of the review will be to: “identify opportunities and develop recommendations for simplifying inheritance tax from both a tax technical and administrative standpoint”.
An OTS report will be published in the autumn of 2018, providing an initial evaluation of aspects of the current inheritance tax regime and what they mean for taxpayers, HM Revenue & Customs and the Treasury; and that identifies opportunities for simplification of inheritance tax supported by analysis and evidence; and offers recommendations for government to consider.
The scope of the review is also now known and includes: the process of submitting inheritance tax returns; gifts rules and the annual thresholds; administrative and practical issues around estate planning, compliance and disclosure; complexities arising from inheritance tax reliefs; the impact of taxpayer decisions, investments etc because of current inheritance tax rules; and the perception of the complexity of rules among taxpayers, practitioners and industry bodies.
Jamie Younger says:
“The current inheritance tax system that we have been working with since the mid-1980s has become very much a part of our tax planning process, and the reliefs available, and particularly those in the rural sector and for agricultural enterprises, are essential aspects in the make-up of many farm and estate businesses and their structure in terms of tax. This review could have major implications and we will be following its process and recommendations assiduously as it moves forward.”