Inheritance Tax Changes
The Office of Tax Simplification (OTS) is an independent adviser to the Government. They make recommendations to the Government with the aim to make the UK tax system easier for taxpayers.
Inheritance Tax (IHT) is most usually thought to apply in respect of the value of the assets of someone who has died, after the liabilities they owe have been paid. However, it also applies in other instances. Gifts made to individuals less than 7 years before their death may be chargeable to IHT and it may also be chargeable in relation to lifetime gifts, whether given outright or into a trust. Although it is worth noting that, when property is held in a trust, it will get taxed separately to assets owned by an individual.
Following the OTS recommendations, the Government are simplifying the reporting regulations so that, from the 1stJanuary 2022, over 90% of non-taxpaying estates each year will no longer have to complete IHT forms. The current forms vary in length and complexity, so this is a welcome change. Full guidance is yet to be provided by the Government, but it is thought that, where all assets are passing to a spouse/civil partner or to a charity, and where the net value of assets being passed is below the nil rate band, currently £325,000, IHT forms will no longer be required.
In addition, the Government have confirmed that they are making permanent the ability of those dealing with an estate or trust to provide an IHT form without physical signatures from both professional agents and unrepresented taxpayers. Instead, a professional agent, such as our team at GHS, must confirm that all those named on the declaration page have seen the form and have agreed to be bound by the declaration.
These changes will reduce and simplify the administrative burden when dealing with probate and reduce time and costs. Further changes are also under review and expected to be implemented in the future to further improve the IHT process ahead of a proposed fully digital system for IHT.
If you require any further advice on the changes to Inheritance Tax, please do not hesitate to contact us on 01992 422128.