New IHT schemes to be included in tax avoidance regime
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The Government has proposed widening the disclosure of tax avoidance regime to include inheritance tax by requiring providers to disclose “new and innovative” schemes.
In a consultation on inheritance tax disclosure, published today, the Government says HM Revenue & Customs wants to be made aware of new schemes set up to mitigate inheritance tax, although existing schemes will be exempt.
The paper says: “In order to restrict disclosures to new and innovative schemes, the draft amending regulations contain a grandfathering rule that would exempt from disclosure any scheme of the same or substantially the same description as a scheme that was first made available for implementation before a given date.”
Fidelity International director of tax and trust planning Paul Kennedy says: “This widening of the disclosure regime brings inheritance tax within it for the first time. The Government is putting a line in the sand to say anything new and innovative that happens going forward we would like to hear about it before you get on and do it.”
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Readers' comments (2)
John Blackmore | 27 Jul 2010 6:41 pm
Not before time.
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'Socrates' | 28 Jul 2010 1:20 pm
Dare I suggest a radical approach to IHT - even though it's likely to be unpopular.
Fiscal policy can always be used politically to penalise the wealthy few. However, that approach is not the most effective way to raise significant tax revenue. Raising substantial tax is more likely to be achieved by levying modest tax on a large number of taxpayers - ie the majority.
Over the past few generations, widespread home ownership has transformed the UK into a nation of inheritors. Therefore, IHT should have become a tax on the many, not the few.
The solution may be to lower the threshold and bring all but the most modest estates into IHT - but at the same time levy the tax by incremental bands. The starting band could, for example, be as little as 5% on the first £50K of taxable estate, rising progressively.
As the Scots say - 'Many a mickle makes a muckle'.
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