Published on: 17th December 2018

The review to simplify Inheritance Tax

The Office of Tax Simplification (OTS) has recently released their first Inheritance Tax review report. This first stage of the report provides an overview of the tax and "sets out recommendations on administrative issues".

The review on Inheritance Tax was carried out after the Chancellor of the Exchequer requested the review at the beginning of the year. The OTS's primary aim was to provide recommendations to simplify Inheritance Tax from an administrative and technical standpoint. As part of the review, the OTS called for people to share their personal experiences and perceptions of Inheritance Tax. More than 3,500 people shared their views, which was a much higher response rate than in previous tax reviews.

This stresses the need for public consultation and, in addition, the OTS gathered evidence from professional advisers, representative bodies and academics, as well as setting up a Consultative Committee for advice. The survey results revealed that the public found administering an estate to be a timely process, with 38% of respondents (who didn't use an adviser) stating that they spent more than 50 hours on estate administration. Furthermore, the responses revealed that the processes of understanding and completing the relevant forms, and obtaining probate were most commonly cited as the most time-consuming.

Many people raised concerns about how Inheritance Tax returns must be submitted, even when there is no tax to pay. In the UK, only 5% of estates are subject to Inheritance Tax upon death, which accounts for fewer than 25,000 estates. However, 65% of respondents (who didn't use an adviser) answered that they "still had to provide significant amounts of information." Additionally, 275,000 Inheritance Tax forms were completed in the 2015-16 tax year, even though Inheritance Tax was only payable on 24,500 estates.

The key recommendation from the report states that "The government should implement a fully integrated digital system for Inheritance Tax, ideally including the ability to complete and submit a probate application." although the OTS recognises that this would not be a quick, easy or cheap task to accomplish.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here. Don't delay ~ Act today!

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