Press release: Tax profession hopes for substantive simplification from OTS review of IHT

Commenting on the start of the Office of Tax Simplification’s review of inheritance tax, John Bunker, Chair of the Chartered Institute of Taxation’s Succession Taxes Sub-committee, said:

“The review must begin with an understanding that you cannot add simplicity, rather you must remove complexity. This is a great opportunity to seek some simplification of both the processes and the law relating to inheritance tax, and it is important that people take the chance to complete the online survey. Any steps to simplify the process for paying tax would be particularly welcome.

“We hope the OTS will include genuine substantive simplification, not just set the ground for a bonfire of taxpayer reliefs and exemptions. There is scope to increase the annual exemption, say to £10,000, as it has been £3,000 for more than 30 years, in return for removing the marriage exemption and possibly “small gifts”, too.

“It is crucial that simplification does not come at the expense of the right people inheriting, for example by the probate process allowing more to bypass provisions of wills. But the law also needs to be simplified; for example some problematic provisions relating to the complex Residence Nil Rate Band need to be addressed.

“It is important that both the OTS, and HMRC in their parallel review, do not lose sight of the fact that most trusts are set up for non-tax reasons such as protecting capital and vulnerable beneficiaries.”

John Bunker added:

“An area of complexity that is ripe for review is trust taxation, which is also being reviewed by HMRC as announced in the November 2017 Budget. But, as seen with the attempts to review this area in recent years, this is easier said than done. Whatever is done, it is vital that the non-tax reasons for trusts, for example to protect vulnerable beneficiaries, to allow different people to benefit at different times and for asset-protection, are recognised and trust taxation is as transparent as possible.”

Notes for editors

1. Today, 27 April 2018, the independent Office of Tax Simplification (OTS) has published a call for evidence and an online survey to gather information about people’s experience and perceptions of inheritance tax.

Earlier this year, the Chancellor of the Exchequer and the Financial Secretary to the Treasury requested that the OTS carry out a review of a range of aspects of inheritance tax and how it functions today to identify simplification opportunities. The scoping document for the review was published on 15 February 2018. The review is considering the existing legislative framework, and the administrative processes through which taxpayers interact with HMRC in relation to Inheritance Tax. The OTS expect to publish their report in the Autumn of 2018.

2. CIOT Press release: Review of inheritance tax welcomed – 31 January 2018

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