On 23 March 2021– the first 'tax day' – the government published a series of tax updates, documents and consultations on tax administration and policy. What are our top takeaways?
1. Inheritance tax (IHT) administration will be simplified to reduce the paperwork families need to complete when someone dies. The government say that from 1 January 2022, more than 90% of non-tax paying estates will not have to complete IHT forms.
Due to the pandemic IHT returns for estate and trusts can be submitted without physical signatures. This will now be permanent.
These changes may to an extent counterbalance the growing number of estates and trusts dragged into the IHT net as a result of the value of assets rising, while the nil rate band allowance has been frozen since 2009 and is frozen until 2026.
2. There will be no comprehensive reform of the taxation of trusts. This is the outcome of the consultation which has been running for some time, the conclusion of which was there is no appetite for change.
This provides comfort that trusts can continue to be used as a vehicle for holding on to and passing on family wealth. Trusts are most often set up for reasons of asset protection, flexibility, and control, and not to avoid tax. The tax implications can be managed via reliefs and exemptions available in the legislation.
3. There was nothing on CGT which had long been expected to be a candidate for change.
This should encourage clients thinking of moving assets down the generations to do so now while rates and reliefs are as they are.
Please contact us for more information.
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