OTS propose IHT simplification

OTS proposes IHT overhaul The Office of Tax Simplification (OTS) has proposed an overhaul of the inheritance tax system, describing the levy as complex and “uniquely unpopular” and suggesting it should be easier to understand. The OTS proposes that the rule which means tax of up to 40% must be paid if someone dies within seven years of passing on money, property or possessions should be altered, trimming the deadline to five years. HMRC data suggests that as just 7m of the £4.38bn inheritance tax take in 2015/16 came from gifts made more than five years before death, the switch would not hit Government revenue. The proposals also suggest that a number of allowances be scrapped and replaced with a single annual gift allowance, with it suggested taper relief should also be abolished. An overhaul of capital gains tax rules is also recommended, with the OTS saying some people are deterred from passing on assets during their lifetime as there is no capital gains tax paid on death. Kathryn Cearns, who chairs the OTS, said the recommendations “would go some way to achieving the goal of making the tax easier to understand and simpler to comply with.". A Times editorial says simplification of IHT rules is “long overdue,” while the Telegraph’s Sam Brodbeck welcomes the fact that “finally someone has proposed some sensible changes to Britain's maddening inheritance tax system.”