Treasury committee calls again for changes to “unsustainable” inheritance tax reforms
Andrew Tyrie, the Chairman of the Treasury Select Committee, has called on George Osborne to change “extremely complex” inheritance tax reforms due to be implemented in April 2017.
This is the second letter Andrew Tyrie has written to the Chancellor over the reforms, saying the reforms have “the hallmarks of unsustainability” and that Osborne’s own correspondence “does not address [my] main points”
He continued: “Inheritance Tax Provisions were already long and extremely complex. The draft clauses… reinforce my concern that your latest Budget will make them even more complex.”
Responding to Tyrie’s first letter, George Osborne wrote that he did “not believe the inheritance tax system in the UK is any more complex than the most comparable systems… [other] countries all have a number of different bands and rates depending on the relationship between individuals.
“As you acknowledge, increasing the nil-rate band to £500,000 would have been unaffordable.”
However Tyrie says Osborne’s point over complexity will be of little comfort.
He wrote: “That will be scant comfort for the UK taxpayer. The provisions on Inheritance Tax now affect a large number of people, many of whom are not wealthy enough to afford highly skilled tax advisers. It is inevitable that a number of them – perhaps many – will make ill-informed decisions about whether and when to sell their house and/or re-write their wills.
“Furthermore it is likely that executors, often not tax experts, will forget to claim the transferable IHT allowances within two years of the end of the month in which the second spouse dies.
The letter continues: “The tax is no longer the exclusive concern of the very wealthy; over the course of a lifetime, more than a million estates will be affected, largely representing strivers who, after decades of hard work, have accumulated enough to pass something on to their relatives.
“Despite this assertion that only the very wealthiest in our society should be asked to pay tax on assets built over their lifetime … even after the proposed reform, the number of estates affected is at its highest level since 1986/7 and more than double the number in 2009/10 when the threshold was frozen.
“The reform has the hallmarks of unsustainability and therefore instability which is the negation of good tax policy.”