IHT review expected before end of year

IHT review expected before end of year

A review on inheritance tax will be published before the end of the year, despite not being mentioned during yesterday's Budget.

Earlier this year Chancellor of the Exchequer Philip Hammond wrote to the Office of Tax Simplification asking it to review inheritance tax because of concerns the system was "particularly complex".

There had been some expectation this review - and a response from Mr Hammond - would be announced during yesterday's Budget but no news was forthcoming and inheritance tax was not mentioned during the speech.

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The Office of Tax Simplification has now confirmed it will be publishing the outcome of the review before the end of 2018.

The amount of money HM Revenue & Customs has received from IHT has been soaring in recent years, despite a number of measures to reduce bills.

The latest figures from HMRC showed £5.2bn was paid in IHT in 2017/18, the most since the current system was introduced in 1986 and it followed eight years of back-to-back increases in the amount paid in IHT.

The increase has been largely attributed to increasing asset values, but has continued despite measures to address this.

For example Mr Hammond's predecessor, George Osborne, had introduced the residential nil-rate band of £100,000 which came into effect last year and sits on top of the existing nil-rate threshold of £325,000 - though given the pace of house price inflation in some parts of the UK, the benefits of this measure have been questioned.

Mr Osborne also scrapped the pensions "death tax" which meant there is no IHT payable on a pension funds paid out before or after the age of 75.

Earlier this month the influential Institute for Fiscal Studies criticised elements of the British inheritance tax system, branding them as "indefensibly generous" and recommended addressing this to help fund the NHS.