Have your say on Inheritance Tax

Chancellor of the Exchequer Phillip Hammond has requested that the Office of Tax Simplification (OTS) carries out a review on Inheritance Tax (IHT) to identify areas to simplify.

The OTS has published its call for evidence and the deadline to respond is 8 June.

The CLA met with officials at the OTS to discuss the proposals and will respond in a professional capacity to the consultation before the 8 June deadline.

You can see the CLA's response here.

The call for evidence is wide-ranging with questions not only about the process but about all aspects of IHT. The consultation covers:

  • the process - forms and guidance, deadline for payments, interaction with probate process, administering the estate, obtaining valuations;
  • gifts - rules and ascertaining if any gifts made;
  • the scope of BPR (page 5) - its interaction with CGT and questions about the definitions of a trading business;
  • farming businesses (page 6) – impact on business decisions such as business vehicles used, when to pass on, farming in hand or letting, structure re diversification, issues re farmhouse;
  • the design of the IHT regime and whether it should be reformed more widely, inviting comparisons with other countries.

CLA members also have an opportunity to engage directly with the review by completing an online survey which the OTS has created to gather evidence from individual members of the public rather than professionals or representative bodies. 

Key messages the CLA’s response will contain:

  • Farming and rural businesses are multi-generational and business owners would have to take a long-term view of business planning.  The viability of the business could be seriously affected if a farmer has to sell up his business assets in order to fund an IHT liability.
  • Major changes to the inheritance regime at this time of uncertainty as a result of Brexit will make it impossible for individual farming businesses to make informed plans for the future or to have the flexibility needed, in order to drive productivity and accelerate economic growth given the current macroeconomic environment.
  • The tax system should dovetail with other government policies, in particular, Defra’s.  The structure of the inheritance tax system should not impede enterprise and initiative or change farming systems, practices, land use and business structures, including the preservation of the environment and to maintain/enhance natural capital.