Treasury committee chairman Andrew Tyrie has called on the Government to remedy “unsustainable” reforms to inheritance tax policy in the March Budget.
The Government unveiled plans to bring in a new IHT allowance of up to £1m for married couples when a family home is included as part of its July Budget, with the plans forming a key part of the Conservative’s election manifesto.
Tyrie first wrote to Chancellor George Osborne to express concerns over the plans in mid-December, calling the changes “a mess of complexity and uncertainty”.
And Tyrie has now responded to draft clauses on the plans, which include tweaks designed to limit disincentives to downsize.
The changes are set to come into effect from April 2017, but Tyrie warns the changes are “impenetrable” for ordinary investors and “traps lie everywhere” in the detail of the policy.
Tyrie adds: “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.
“The reform has the hallmarks of unsustainability and therefore instability which is the negation of good tax policy. The March Budget will provide another opportunity to remedy these problems. I urge you to take it.”
It comes after Osborne denied the proposals would make the UK’s IHT rules unreasonably complex.
In a letter dated 9 December, Osborne said: “I agree that we should always strive for simplicity in the tax system where possible but I do not believe the inheritance tax system is any more complex than most comparable systems”.