The Office of Tax Simplification (‘OTS’) published its long-awaited review on reforming Inheritance Tax.

A first report released in November 2018 dealt with the administration of estates while the latest report focuses on how Inheritance Tax could be made “easier to understand and more intuitive and simpler to operate”.

The stand-out headlines in the latest report were recommendations to reduce the seven-year rule for gifting assets to five years and to increase the lifetime capital gift allowance from the current £3,000 to something more meaningful. Both would be welcomed particularly an increase to the lifetime capital gift allowance given that this has not increased since 1984.

The press has also been keen to jump on a mention in the report of Business Property Relief (‘BPR’) and whether the treatment of AIM shares is within the policy intent of BPR. Whether IHT exemption will continue for such investments is therefore a matter of speculation and we shouldn’t be second guessing until we are provided with further information.

Disappointingly there was no reference to increasing the Nil Rate Band, or making the Residence Nil Rate Band fair for those without children or with estates above £2m.

The Treasury has said it will respond to the report in due course and consider its recommendations.

We will keep this position under review and communicate any matters of importance once information is released.