Will inheritance tax be simplified?

Will the Office of Tax Simplification’s proposed changes to IHT be passed in the Spring Budget?

Another announcement to listen out for in the Spring Budget, which will be delivered by Rishi Sunak, following Sajid Javid’s resignation as Chancellor of the Exchequer last week, is whether he will act on the recommendations of the Office of Tax Simplification (OTS) regarding inheritance tax (IHT).

As reported previously, the OTS suggested simplifying IHT on lifetime gifts including reducing the period of potential exemption from 7 to 5 years. Such a change would mean that the donor would only be required to survive for 5 years following a gift for the transfer to be exempt from IHT.

The OTS also suggested that the conditions for business property relief might be tightened up by aligning the rules with the definition of a trading company for capital gains tax. This relief currently provides 100% relief on the transfer of shares in an unquoted company.

The suggested change would mean that more transfers of shares would potentially be liable to IHT and may require a careful review of your plans if you are looking to pass on your business.

Our Beavis Morgan tax experts are available to guide you and advise you on the available strategies. For more information, please contact your usual Beavis Morgan Partner.

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