As well as being one of the most unpopular taxes for the estimated 30,000 estates affected each year, Inheritance Tax is also one of the most complicated.
Following a request from the Chancellor in January 2018, the Office for Tax Simplication (OTS) has been carrying out a review of the process of dealing with Inheritance Tax and its impact on bereaved families at a difficult and stressful time.
In calling for evidence the OTS received a record number of responses with over 3,500 people and businesses sharing their views. Those comments shaped the recommendations of the first report published on 23 November 2018. Some of the main issues highlighted were
- Completing the forms is hard and it is not clear which form to use
- The amount of information requested is often disproportionate to the value of the estate – particularly in cases where no tax is due
- The guidance provided isn’t clear
- HMRC should provide receipts for tax payments
When launching the report the OTS recognised that there is a huge opportunity to improve the experience of thousands of people dealing with Inheritance Tax each year. Among the recommendations in this initial report are:
- Reducing or even removing the requirement to submit forms for smaller or simpler estates
- Simplifying the administration and guidance
- Standardising the requirements of different banks and financial institutions
- Using technology to bring the whole system on-line
A second report covering wider areas of concern is expected in Spring 2019 before the Government decides how best to implement any changes.
Copies of the first report on Inheritance Tax Review can be downloaded at: https://www.gov.uk/government/publications/office-of-tax-simplification-inheritance-tax-review
Further information on Inheritance Tax generally can be found at https://www.gov.uk/money/personal-tax-inheritance-tax