Inheritance tax red tape is cut

A cut in the red tape involved in UK inheritance tax has been announced as part of the Treasury’s ‘Tax Day’, which took place last month.

The move will be of benefit to more than 200,000 estates every year, dramatically reducing the amount of paperwork many families fill out.

More than 90 per cent of non-taxpaying estates will no longer have to complete inheritance tax forms when probate or confirmation is required, from January 1 next year.

The reduction in paperwork and other red tape is being introduced to help people with smaller estates – up to around £1m.

The measure was one of a number announced in what was dubbed ‘Tax Day’, as the Treasury issued more than 30 updates, consultations and documents.

It said the aim was to “strengthen policymaking and help create a more trusted, simple and modern tax system”.

The government also announced it will legislate to tighten tax rules for second property owners, meaning they can only register for business rates if their properties are genuine holiday lets.

In England, many holiday lets are liable to pay business rates, rather than council tax, when an owner declares that they intend to let their property in the next year.

They may also be able to claim rates relief of up to 100 per cent. The change announced will ensure that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let – but make little or no realistic effort to do so.

The government also published a call for evidence on the tax administration framework as part of its work to create a simpler and more easily navigated system.

It wants views on how the administration of the system could be updated to it easier to deal with and help make tax more straightforward for taxpayers, as well as building greater resilience and capacity to respond to future crises.

An interim report on the government’s Fundamental Review of Business Rates, which sets out a summary of responses to last year’s call for evidence was also published. The final report will be published in the Autumn.

The government also announced. consultation on potential changes to Air Passenger Duty that could improve connections across the UK and regions by cutting the tax on domestic flights.

Jesse Norman, financial secretary to the Treasury, said: “We are making these announcements in order to increase the transparency, discipline and accessibility of tax policymaking.

“These measures will help us to upgrade and digitise the UK tax system, tackle tax avoidance and fraud, among other things.

“By grouping them together, we want to give Members of Parliament, tax professionals and other stakeholders a better opportunity to scrutinise them.”

Many of the announcements form a key part of the government’s wider ten-year plan “to build a trusted, modern tax system”.