Potential Inheritance Tax Overhaul

The Office of Tax Simplification (did you know there was one?) has come up with a few ideas on how to deal with the complexities of Inheritance Tax ...

Well, eleven of them to be precise. Response to the consultation was unusually high, which shows that it's a contentious area. Perhaps it's because the total amount of inheritance tax being collected has increased by 8% over the 2017/18 tax year compared to the previous financial year.

The proposal that is likely to catch most people's eye is the one that cuts the time period that parents and grandparents need to survive when gifting assets to children and grandchildren for those gifts to escape Inheritance Tax.

Currently, the time period is seven years with a taper relief for years 4 to 7, but the proposal is to be a straight five years. So, if death occurred the day before the fifth year anniversary, the tax would become due, but if it occurred the day after, it wouldn't.

"The second proposal likely to catch the eye is a change to
Business Property Relief!"

This will apply if you own certain AIM shares. In a nutshell, the proposal is saying that for tax purposes, a benefactor would inherit the shares at the cost value, not the market value at the date of death. It was even questioned whether the relief should be removed entirely from AIM shares.

As I say, these are proposals and who knows what the Treasury will do in the next few months with everything else that is going on, but I'll keep you updated as and when I hear anything new.

If you'd like to find out more about these Inheritance Tax proposals, or need advice on any other issues around tax or your accounts then do give me a call on 01908 774320 or click here to ping me an email and let's see how I can help you.

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More about Roger Eddowes ...

Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

Potential Inheritance Tax Overhaul

Two great idea that came out of consultation ...