A recent review conducted by the Office for Tax Simplification (OTS) has suggested recommendations for the Government to introduce a modern digital system for inheritance tax (IHT).
The OTS, an independent office of HM Treasury, conducted the review following the Government’s call to review IHT and focused on the administration of the tax.
A second review is due to be published in spring 2020 looking at the structure of the IHT system.
The review has suggested that IHT is adding to the stress of families dealing with the death of a loved one, while stating that a simplified digital IHT and probate system would reduce the amount of information required by those who are not liable for IHT.
IHT is currently paid at a rate of 40 per cent on estates where the value exceeds £325,000, with the threshold increasing to £475,000 if an estate is gifted to children or grandchildren.
A Government forecast recently found that a million people over 60 are at risk of their estates being liable for IHT because of the rising price of houses, while the Office for Budget Responsibility (OBR) has predicted that IHT contributions will increase by £1 billion in the next five years as a result of more estates being liable for the tax.
The nil-rate band has been frozen at £325,000 since 2010, with more estates now being liable for IHT, and many more on the edge of the threshold.
The Government received £5.3 billion in IHT contributions last year, with the figure expected to rise to £5.5 billion this year.
For help and advice on matters relating to IHT and estate planning, contact our expert Private Client team today.