There was much speculation that 2018’s Budget would include an update on the Inheritance Tax (IHT) review. Last week when the Chancellor of the Exchequer, Philip Hammond, presented the annual Budget, there was no mention of IHT. However, the independent Office of Tax Simplification (OTS) has now confirmed that the findings from their Inheritance Tax review will be published before the end of the year.
The OTS are carrying out the review on IHT after the Chancellor of the Exchequer and the Financial Secretary to the Treasury requested the review earlier this year. In February 2018, the OTS released a scoping document that outlined what the review would cover including that the “overall aim of the review will be to identify opportunities and develop recommendations for simplifying IHT from both a tax technical and an administrative standpoint.”
On the 27th of April, the OTS published a call for evidence and launched an online survey which asked individuals, professional advisers and representative bodies to share their personal experiences and perceptions of IHT. The consultation ran until the 8th of June 2018 and the OTS will now use their findings to produce the report that will be released by the end of 2018.
Why is the IHT General Simplification Review needed?
The amount of IHT collected by HMRC has risen dramatically in the last few years and hit a record £5.3 billion in the 2017/18 tax year. This was a 13% increase in comparison to the £4.6 billion collected in 2016/17. With the rise in the number of estates subject to IHT, this review is very timely and will hopefully ensure that IHT is simpler to understand in the future.
A case earlier this year highlighted the lack of understanding when it comes to dealing with IHT as part of administering an estate. The Personal Representative, Mr Harris, was left with a staggering IHT bill of more than £340,000. Mr Harris was administering a £1.2 million estate and misguidedly distributed the assets to the beneficiaries before all of the IHT had been paid. Mr Harris’ case shows how a mistake or misunderstanding in regards to IHT can be of great consequence to Personal Representatives.
At Kings Court Trust, we often see those responsible for administering an estate struggling to understand the legal and tax aspects of estate administration. That’s why we offer an estate administration service that takes the legal and financial burden of your clients’ shoulders and puts the onus on ourselves. We’re experts in estate administration and will efficiently take care of absolutely everything, whilst supporting your clients through a difficult time.
If you or your clients have any questions about estate administration or Inheritance Tax, call our experienced Client Services Team on 0300 303 9000 who can answer all of your questions.
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