Major changes to the Wills and Probate regime could cut “Inheritance Tax red tape” for more than 200,000 estates each year, it has been announced.
The report forms part of the Government’s new 2021 tax consultation, which aims to help create a “more trusted, simple and modern tax system”.
Under the planned reforms, over nine in 10 non-taxpaying estates will no longer have to complete Inheritance Tax forms when probate or confirmation is required.
The measure, which is proposed to come into force from 01 January 2022, is expected to cut red tape for more than 200,000 non-tax paying estates – accounting for around 90 per cent of all estates.
The changes will also see the temporary provision allowing digital signatures on Inheritance Tax returns made permanent, following a successful trial period during the coronavirus pandemic.
The consultation also includes plans to increase transparency and trust in the system. As part of this, reporting regulations will be updated to “clarify the requirement for estates to submit an Inheritance Tax account where the deceased was never domiciled in the UK but owned indirect interests in UK residential property”.
The plans build on an Office of Tax Simplification (OTS) review which found that “many people had limited understanding about the way Inheritance Tax works”.
Commenting on the new tax policy, HM Revenue & Customs (HMRC) said: “Following recommendations by the OTS, the government will reduce administrative burdens for those dealing with Inheritance Tax.”
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