HMRC look to simplify Inheritance Tax
On 28 April 2018 HM Revenue & Customs issued a call for evidence and requested completion of an online survey relating to the potential simplification of Inheritance Tax (“IHT”).
The deadline for any submissions of responses was 8 June 2018 and HM Revenue & Customs are now analysing the feedback.
Although only 5% of estates are liable to Inheritance Tax the surge in house prices, especially in London and the South East, could see this number increase.
Many people find the formal process, especially surrounding probate, onerous and stressful.
So what were HM Revenue & Customs interested in?
- Whether the IHT forms and related guidance could be made clearer or easier to complete
- Whether the deadlines for completing the forms and paying any resultant IHT cause any problems
- Whether the fact that probate has to be granted before an estate can be distributed causes any practical difficulties
- Whether administration and compliance burdens on estates where there is no IHT payable could be reduced
- Could the rules surrounding lifetime gifts be simplified?
There are specific reliefs relating to the transfer Business Property Relief (“BPR”) and Agricultural Property Relief (“APR”). With regard to these HM Revenue & Customs are interested in finding out whether these rules have an impact on;
- Whether to sell or transfer a family business during lifetime or wait until death
- The structure of the business itself
In terms of businesses there are different rules in place for BPR, APR, Capital Gains Tax holdovers and Entrepreneurs’ Relief. HM Revenue & Customs are interested in possible ways of removing this complexity.
In terms of the wider IHT system, HM Revenue & Customs are interested to know peoples thoughts on whether the system should be simplified perhaps through the removal of certain exemptions which could fund a lower or graduated rate of IHT or perhaps higher Nil Rate Bands
It will be interesting to review, in due course, HM Revenue & Customs’ response to the feedback from the survey.
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