Complex inheritance tax ‘needs to be simplified’

The Treasury has accepted complaints from the public that the administration of Inheritance Tax it is too complex, old fashioned and needs to be simplified, and has agreed to make changes.

The announcement comes after more than 3,500 people responded to a public consultation carried out by the Office of Tax Simplification (OTS) on behalf of the government.

Many of those who responded said they were being asked to fill in complicated forms even when the relative who had died had only left a small amount.

Some of the main issues highlighted in the OTS review were that completing forms is hard and it can be difficult to work out which one to use, the amount of information required can be disproportionate and the guidance provided can be unnecessarily difficult to navigate.

Angela Knight, OTS Chairman, said: “Inheritance tax is both unpopular and complicated. The basic design of the tax itself is for government, but at the OTS we can address that most frequent of all comments, at least make it easier for the families to fill in the forms”.

“Improving the administration of this tax in these ways is important as having to deal with the current process can seem overwhelming to people at a time when they are both preoccupied and distressed.”

In response to the review, Jesse Norman, Financial Secretary to the Treasury, said the government will change reporting regulations so that
from 1 January 2022, over 90% of non-tax paying estates each year will no longer have to complete Inheritance Tax forms for deaths when probate or confirmation is required.

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