Treasury committee chairman Andrew Tyrie has branded Chancellor George Osborne’s property inheritance tax reforms “a mess”.
Under proposals set out in the Budget, the main residence nil-rate band will increase from £325,000 per person to £500,000. The combined threshold for married couples will rise to £1m for married couples by 2020.
However, Tyrie has written to Osborne urging the Government to “consider the problems posed by the complexity of the current proposals”.
He says: “The Chancellor should think again about these proposals. They are a mess of complexity and uncertainty and they almost certainly don’t need to be, in order to achieve the Government’s objectives.
“The further policymakers lose sight of simplicity, the more taxpayers are forced to spend money on the only people capable of making sense of their affairs – tax accountants and lawyers. The danger must be that rules this complex will make tax accountants and lawyers the main beneficiaries.”
Tyrie also warns the reforms create uncertainty for older homeowners.
He says: “Until the downsizing rules are laid in statute – not likely to occur until later in 2016 – elderly homeowners will have no basis on which to plan. Many elderly homeowners will reasonably want to plan now. The more guidance that they can have in the next few months, the better.
“Property price inflation has caused IHT to bite on people who are by no means ‘wealthy’. The Government is right to tackle the problem. The Finance Bill is the opportunity.”
Read more about the complexities of Osborne’s reforms in Tony Wickenden’s latest column here.