BKL looks at a recent publication which recommends a quite fundemental overhaul to IHT to address issues with Inheritance and Intergenerational Fairness - and is hosting a seminar on Capital Taxes
The All-Party Parliamentary Group (“APPG”) on Inheritance and Intergenerational Fairness has just published a report.
The caveat attached to the report is important:
“This is not an official publication of the House of Commons or the House of Lords. It has not been approved by either House or its committees. All-Party Parliamentary Groups are informal groups of Members of both Houses with a common interest in particular issues. The views expressed in this report are those of the group.”
So the APPG’s recommendations on Inheritance Tax (“IHT”) are certainly not about to pass into law; and it is more than likely that nothing will ever come of them. But already Mr Johnson has shown that he is prepared to put the cat among the pigeons if need be, so it is as well to be aware of these recommendations, revolutionary though they are. They include:
- Abolition of Potentially Exempt Transfers –all transfers except those between spouses and civil partners would be chargeable to tax, subject only to an annual exemption of £30,000: effectively a return to Capital Transfer Tax
- Abolition of most special reliefs including Business Property Relief and Agricultural Property Relief
- Removal of the CGT rebasing to market value on death
- Removal of the “main residence” enhancement to the IHT Nil Rate Band
- Removal of the Nil Rate Band from lifetime transfers, leaving it to be available only on death
- Reduction of the rate of tax to 10%, except that the rate applying on death for estates over £2m would be 20%
- Inclusion of the value of pension funds in the death estate unless they pass to a surviving spouse or civil partner
- Introduction of an annual tax charge on discretionary trusts
- Compulsory electronic reporting to HMRC of all lifetime gifts over £3,000
The full report may be found here.
No doubt the report will be the subject of lively discussion at our forthcoming seminar, Strategic Changes to Capital Taxes, where the speakers will include Bill Dodwell, Tax Director of the Office of Tax Simplification, which produced its own (rather more modest) shopping list of suggested changes to IHT last July. For more detail on the seminar and to book a place, please visit our website.