Solicitors ‘disappointed’ by proposed inheritance tax changes
Solicitors claim proposed changes to inheritance tax will leave major problems unresolved, according to an article in the Law Gazette.
In addition, members of the legal profession feel the changes will not lead to “wholesale change”. The Office for Tax Simplification’s review recommended that fewer people should need to pay tax on any gifts given shortly before a person’s death to cut down on administration. Currently, gifts will be taxed if the person dies within seven years. The proposal is to cut this down to five.
According to the Office of Tax Simplification, seven years is an awkward time frame. Bank statements that are more than six years old can be difficult and time-consuming for the executors of a will to get hold of. It also states current gift exemptions are “complex and create confusion”. The Office has suggested placing annual gift exemptions with an overall personal gift allowance, but it did not indicate how large the allowance would be.
Reforms do not go far enough
The organisation Solicitors for the Elderly (SFE) expressed the view that the proposed reforms do not go far enough. The SFE’s chair of its board, Michael Culver, said five years was still a long time and there were other more beneficial changes that could be made on the inheritance tax that applies to lifetime gifts.
As an example he quoted the situation where individuals are able to give away £3,000 every tax year where the seven year rule does not apply. The amount has not altered since 1980s, and an increase was long overdue.
Emily Deane, the technical counsel at the Society of Trust and Estate Practitioners (Step), added her organisation was disappointed that the Office for Tax Simplification had not made any recommendations in relation to the nil-rate band, the residence nil-rate band and the treatment of trusts, Step, she said, believed the government could expand the recommendations and look at wholesale changes in inheritance tax policies.
Simon Davis, the president of the Law Society for England and Wales, said the Society welcomed the changes, but the inheritance tax was too complicated. Much could be done and was needed to ensure all processes around inheritance tax were as simple as possible. This would make them easily understood by practitioners and tax payers.
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