New rules around Inheritance Tax

From 1st January 2022 there will be new rules in place that aim to simplify current compliance with inheritance tax regulations which will mean that the administrative burden of dealing with inheritance tax is reduced. These rules are being put in place following recommendations to the government from the Office of Tax Simplification (OTS).

The simplification of the regulations will mean that from 1 January 2022 over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms for deaths when probate or confirmation is required.

Also, as a result of the pandemic, provisions were put in place so there was no need to have physical signatures from everyone involved in an IHT claim. These provisions are going to be made permanent, which will help with simplifying the administration process. On top of this the regulations will be updated to make clear the requirement for estates to submit an IHT account where the deceased was never domiciled in the UK but owned indirect interests in UK residential property.

John Bunker, chair of CIOT's Private Client (UK) Technical Committee, commented: 'We welcome that, as part of the implementation of the OTS recommendations 'to improve the customer journey' for IHT many families in the aftermath of bereavement will be spared the additional stress of supplying unnecessary detail to HMRC. The change will mean that only around 15% of estates will need to complete some form of IHT return. The challenge for HMRC will be to design a process that meets that aim and is fit for purpose in only nine months.'