Does the regime distort decision-making?

The chancellor of the exchequer has called for a review of inheritance tax asking the Office of Tax Simplification (OTS) to make sure the system is ‘fit for purpose’.

In a letter to the OTS Philip Hammond called the regime ‘particularly complex’ and requested proposals to simplify it. He said the review should also focus on how the gift rules interact with the wider inheritance tax system and whether the current framework distorts taxpayers’ decisions on transfers investments and other transactions.

Yvette Nunn co-chair of the ATT’s technical steering group said the OTS should consider simplification of taper relief as part of the review. Substantial gifts made three to seven years before death can benefit from a tax reducer known as ‘taper relief’.

She said: ‘Restructuring taper relief so that the gifts themselves were tapered would be much more intuitive to the public than...