OTS outlines alterations to IHT system

In a new report, the Office of Tax Simplification (OTS) has outlined a series of recommendations designed to 'simplify the UK's inheritance tax (IHT) system'.

11 Jul 2019

In a new report, the Office of Tax Simplification (OTS) has outlined a series of recommendations designed to 'simplify the UK's inheritance tax (IHT) system'.

In the report, the OTS urged the government to reduce the current seven-year gifting rule to five years. It also suggested abolishing the taper relief system and replacing the many forms of lifetime gifts with a 'personal gift allowance'.

In addition, the OTS recommended reducing the complexity in the interaction between IHT and capital gains tax (CGT).

Commenting on the report, Bill Dodwell, Tax Director at the OTS, said: 'The taxation of lifetime gifts is widely misunderstood and administratively burdensome.

'We recommend 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.

'Where there is IHT to pay on lifetime gifts, 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.'

Aside image

Accountancy services tailored to you.

Find out more »

Aside image

Are you tired of bookkeeping?

Find out more »

Aside image

Is your business just starting up?

Find out more »

Aside image

Are you paying the right amount of VAT?

Find out more »

Aside image

Struggling with your self assessment tax return?

Find out more »

Aside image

Looking for more than just compliance services?

Find out more »

Why not register to receive our Monthly Newswire?

Once a month we'll send you an email packed full of essential business news and handy tax tips to help save you money.

Sign up now