The potential digitisation of inheritance tax

Inheritance Tax (IHT) could be the next tax system to go digital as a new report calls for the Government to make changes.

An 82-page review from the Office of Tax Simplification (OTS) underlines the complexity of the current IHT system. Chancellor of the Exchequer, Philip Hammond commissioned the OTS early last year to carry out the review, which has recommended the full integration of a digital IHT system.

570,000 people die each year in the UK, but only five per cent meet the criteria to pay IHT. This means that currently, after the passing of a loved one, a majority of families are needlessly filling out forms that have been described as both stressful and time-consuming in order to receive probate.

The OTS has suggested that the digital system for IHT have a feature that enables families to complete a probate application, separate to the IHT.

In the report, the OTS states that it is aware that the creation and implementation of such a system would take a while, so have given a number of suggestions for the short term, which include:

  • Reducing the complexity of the current forms.
  • Creating a separate, basic form for smaller estates.
  • Changing the criteria that have to be met in order to fill out an IHT form.
  • Updating IHT instructions to make them more succinct.
  • Allowing for better communication between tax departments and the Government.

Chairman of OTS, Angela Knight has stated: “Inheritance Tax is both unpopular and complicated. The OTS has worked on ways to address these practical complexities, which have come through loud and clear. The recommendations will make it easier for the majority, and would mean that in future, many may not have to do the forms at all.”

To reduce the stress of dealing with inheritance tax alone, contact MD Consulting.

Link: Are the inheritance tax rules about to be overhauled?

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