The Office of Tax Simplification has published its scoping document looking at a review of the Inheritance Tax (IHT) system, with “major implications” for farmers expected.
Further to the Chancellor of the Exchequer Philip Hammond’s letter to the Office of Tax Simplification (OTS) in January instructing a review of the Inheritance Tax (IHT) system, the OTS has in the last few days published a document looking at that process.
Jamie Younger, Partner with Chartered Accountants Saffery Champness, says the review has been “anticipated for some time”.
“Whilst it only applies still to a small percentage of taxpayers at around 5 per cent, clearly those owning land and property are likely to be affected – hence it is of particular relevance to the farming and landed estates sectors,” Mr Younger said.
The OTS, in its scoping document, says that the overall aim of the review will be to identify opportunities and develop recommendations for simplifying IHT from both a tax technical and administrative standpoint.
An OTS report will be published in autumn 2018 providing an initial evaluation of aspects of the current IHT regime and what they mean for taxpayers, HMRC and the Treasury.
It will also identify opportunities for simplification of IHT supported by analysis and evidence; and that offers recommendations for Government to consider.
The scope of the review is also now known and includes the process of submitting IHT returns, gifts rules and their annual thresholds; administrative and practical issues around estate planning, compliance and disclosure; complexities arising from IHT reliefs; the impact of taxpayer decisions, investments etc because of IHT rules; and the perception of the complexity of IHT rules among taxpayers, practitioners and industry bodies.
Mr Younger continued: “The current IHT system that we have been working with since the mid 1980s has become very much a part of our tax planning process, and the reliefs available, and particularly those in that apply to the rural sector and agricultural enterprises, are essential aspects in the make-up of many farm and estate businesses and their structure in terms of tax.
“This review could have major implications and we will be following its process and recommendations assiduously as it moves forward.”
