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The Treasury is calling for a review of inheritance tax (IHT), stating that it is too complicated and needs simplification for the 3% of estates affected.
The Office of Tax Simplification has already highlighted IHT as an area ripe for an overhaul and now the Chancellor, Philip Hammond, has asked the body to conduct a system-wide review of the current tax regime, and wants to see proposals for simplification, ‘to ensure that the system is fit for purpose and makes the experience of those who interact with it as smooth as possible’.
The review will include a focus on the technical and administrative issues within IHT, such as the process of submitting returns and paying any tax due, as well as practical issues around routine estate planning and disclosure.
It could also look at how current gifts rules interact with the wider IHT system, following the outcry about taxation of donations to the recent Brexit referendum campaign which falls under IHT, although donations to regular election campaigns are exempt.
One of the aims is to address the way the current IHT rules affect tax planning surrounding transfers, investments and other relevant transaction.
There has been criticism in recent years over the increasing complexity of inheritance tax and the introduction of the nil rate band from 2017-18 has also created confusion for taxpayers.
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