The possibility of upcoming changes to Inheritance Tax Laws have been mooted, and our Director Stuart Maher has been considering the possible consequences.
A new report has been published by the All-Party Parliamentary Group for Inheritance and Intergenerational Fairness (APPG IIF) recommending that Inheritance Tax be abolished in its current form and replaced with an alternative regime.
After hearing evidence from a range of industry groups and exploring the history of Inheritance Tax , the types of reliefs available, examples of Inheritance Tax systems in other countries and potential future reforms, the cross-party group of MPs is putting forward two recommendations to policymakers:
- Replace the current Inheritance Tax regime with a tax on lifetime and death transfers of wealth, with very few reliefs and a low flat rate, likely between 10 per cent and 20 per cent. The CGT tax-free death uplift would be abolished;
- Give greater powers to HM Revenue and Customs and HM Treasury to collect more meaningful data through compulsory electronic reporting of lifetime gifts over the current annual exemption of £3,000, even if they are not immediately taxed.
The APPG IIF has criticised the current system as being complex, ineffective, riddled with anomalies, distortionary and unfair.
John Stevenson MP, Chairman of the APPG IIF, said, “The huge complexity around how the tax is levied, and the reliefs available on it, leads to lots of confusion and a strong sense of injustice. The rich get away with not paying and IHT is perceived as an unfair penalty on hard working savers.
“Our bold proposals for reform seek to address this unfairness by simplifying the system and ensuring that the higher value estates that currently take advantage of so many reliefs and exemptions actually pay some IHT.”
The government is now considering the recommendations, and whist there were no policy announcements in the recent Budget we should all be aware that change in this area is almost inevitable.
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