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The Office of Tax Simplification (OTS) recently released its second review regarding the simplification of Inheritance Tax (IHT) legislation, following its first review back in November 2018.

The review provides 11 recommendations which look to address inconsistencies across different tax regimes, confusion amongst taxpayers and advisors alike and longstanding legislation that has not taken account of inflation. We have provided a full review of the legislation with commentary in our latest Tax Report.

Whilst a few of the recommendations are questionable in terms of their significance, most would lead to positive changes without impacting negatively on tax receipts – so all sides could be happy.

As an advisor, I am particularly keen to see the inconsistencies and complexities of the regime ironed out to make it easier for my clients to plan effectively and not unintentionally burden their heirs with tax liabilities.

Working in a rural county, I will be interested to see what comes of the proposed review of Agricultural Property Relief (APR).  I would like to see a more fair approach to APR to avoid the situation where a farmer, who has worked the land his whole life, is forced to move out of the farmhouse due to ill health and therefore loses the right to tax relief on the property.

We also need to address the inflationary issues of outdated legislation. An example of this is the small gift exemption of £250 per recipient that was brought into force in 1984 and hasn’t been adjusted for inflation. Had it of been, this would now stand at £1,010 per recipient. The OTS provided context that, should the small gift exemption be increased to £1,000, this would reduce IHT receipts by less than £100,000 per annum but allow a significant number of taxpayers to plan more effectively.

Some of the other key recommendations include:

  • Simplification of the multiple gift exemptions.
  • Reducing the 7 year assessment window to 5 years.
  • Abolishing taper relief.
  • Removing the capital gains uplift on death.
  • Reviewing the definition of ‘trading’ in relation to Business Property Relief

With the uncertain future a new PM and Brexit, IHT reform may not be top of the agenda but it is hoped that the Government takes on board the OTS’ recommendations and looks to consider these when the Budget is announced at the end of the year.


For more information, take a look at our Tax Report on the OTS’s review of IHT, or contact us to discuss IHT planning.

About the author

Adam Spriggs

Adam began his career in London advising individuals and businesses on UK/US tax matters, before working for Grant Thornton and a local firm in South Wales focusing on advising OMB’s. More recently he helped grow an industry leading R&D tax consultancy team in London. Adam qualified as a Chartered Tax Advisor (CTA) in 2012 and joined Haines Watts in May 2019.

Adam prides himself on building long term relationships with the people he works with, understanding their short and long term plans and helping them understand their tax affairs more clearly as well as implementing effective planning strategies.

Adam is married with two sons and a daughter. Outside of work he enjoys going to the gym, spending time with his family and friends and going on holiday whenever the opportunity presents itself.

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