Following a consultation process which generated an “unprecedented level of interest” a new report from the OTS contains 11 recommendations to deliver a more “coherent and understandable structure of the tax”.
The recommendations include:
- Replacing the multiplicity of lifetime gift exemptions with a single personal gift allowance, to be set at a sensible level, and incorporating an increased lower threshold for small gifts
- The seven-year period be shortened to five-years (significantly reducing the workload on executors), and abolishing the tapered rate of Inheritance Tax
- The OTS recommends the government explores options for simplifying and clarifying the rules on who is liable to pay this tax, and how the £325,000 threshold is allocated between different recipients.
- Highlighting the complexity in the interaction between Inheritance Tax and Capital Gains Tax, as well as in relation to the reliefs available for businesses and farms.
Kathryn Cearns, OTS chairman said: “Although only a small number of people pay Inheritance Tax each year, a far greater number worry about it. The OTS’s packages of recommendations would go some way to achieving the goal of making the tax easier to understand and simpler to comply with.”