Inheritance tax – the most hated tax?
The Office of Tax Simplification (OTS) was tasked with reviewing the administrative and technical aspects of inheritance tax. And the OTS recently released the first of the two reports what come out of the review. The full Inheritance Tax Review report can be found here.
This report looked at the day to day matters of concern, illustrated by advisers and the general public, and it clearly touched a nerve given the OTS received, in its own words, ‘unprecedented public interest’. In the list of the public’s most disliked taxes, inheritance tax clearly remains at the top.
The feedback to OTS bore this out as it reflected the difficulty of attempting to complete complex forms containing technical terms and navigating an unfamiliar process. All while trying to understand the financial affairs of the deceased and grieving for a loved one.
The report has led the OTS to come up with a number of recommendations including; converting to a digital service; automated issuing of payment receipts; streamlining of HMRC forms; an overhaul of the online guidance; and integration with the probate process. Finally, a welcome improvement was the recommendation that the forms for lifetime transfers and exit charges (IHT100) should be divided into documents specific for each inheritance tax event.
These are all positive recommendations and will no doubt align with the recent moves of both HMRC and the Probate Registries to the digital submission process.
However, even with these improvements, professional advice will still be vital in many estates and trusts in order to accurately complete the inheritance tax forms and provide planning opportunities for both the current and any future inheritance tax events.
We await the second and likely more controversial report in the Spring of 2019 what will be looking at the technical and design issues of the tax.
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