Announcements on IHT welcomed by experts

Inheritance Tax (IHT) experts have welcomed the government’s announcement that reporting regulations for IHT are to be simplified later this year.

The Treasury has confirmed that from 1 January 2022, more than 90% of non-taxpaying estates will no longer have to complete IHT forms for deaths when probate or confirmation is required.

The changes were announced yesterday as part of the government’s ‘Tax Day’, which saw the Treasury publish a number of consultations, updates and policy documents.

Currently, as a result of COVID-19, there is a temporary provision which allows those dealing with a trust or estate to provide an IHT return without requiring physical signatures from all those involved, and the government has also announced that this will be made permanent.

CEO at probate specialist Exizent, Nick Cousins, welcomed the changes and suggesting anything that can reduce the administrative burden for those dealing with bereavement is good news.

“The bereavement process – a big part of which is handling probate and IHT – is a slow and stressful one, made even more challenging by the fact that the person is often grieving while attempting to navigate all administration involved,” Cousins said.

“On average, probate takes around three months, but for one in 14 people it takes a year or more, and these delays are most often caused by hold ups in administration. This is not just time consuming, but incredibly stressful.

“Much of our work at the moment is on inheritance forms, so we absolutely welcome these reforms, as they will make a huge difference to so many people. But there is so much more that can be done. We believe that the process can be improved by technology and better access to data, so we have created a platform which helps make the process more efficient and less stressful for those involved.”

Responding to the announcement, NFU Mutual chartered financial planner, Sean McCann, also welcomed the move but agreed that more can be done, suggesting the government “should go further”.

“Currently, thousands of bereaved families are forced to complete complex IHT forms, even when it is clear there is no IHT to pay, often feeling forced to pay a solicitor for fear of making a mistake,” McCann highlighted.

“Reducing the reporting requirements is a positive step forward, but the government should go further and simplify what is a fiendishly complex tax, feared by many but paid by few.

“Introducing simpler rules on lifetime gifts and removing some of the traps that families can fall into, such as making life insurance pay-outs free of IHT, would go a long way to removing this fear.” 

Royal London head of intermediary development, Clare Moffat, added: “This is a step forward as filling in lengthy forms when there is no IHT to pay is an admin burden that isn’t needed at an already difficult time for families. The government has said that it will respond to the second IHT consultation so it will be interesting to see what other changes might happen in relation to IHT.”

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