Middle classes to benefit from inheritance tax reforms
HUNDREDS of thousands of middleclass families will benefit from cuts in inheritance tax red tape under reforms to be set out on “tax day” this week.
The move to be unveiled by the Treasury is expected to reduce dramatically the amount of paperwork many grieving families are required to fill out.
It will be announced as part of a Tax Policies and Consultations Update, or tax day, on Tuesday, a series of long-term measures held over from the Budget.
The Treasury will also publish updates on its consultation for an online sales tax. Summaries of the ideas from respondents including a so-called delivery tax will be made public.
Other measures will include harsher measures against those who promote tax avoidance schemes and a proposal to force tax advisers to hold professional indemnity insurance.
The reduction in bureaucracy is part of the Government’s long-term strategy to cut red tape and simplify taxes.
More than 200,000 estates will no longer need to complete certain inheritance tax forms, under the latest
changes. Currently estates that do not need to pay inheritance tax are still required to fill in HMRC pre-probate forms. But as part of its long-term strategy to cut red tape and simplify taxes, the Government is changing the rules and removing this requirement for nine out of 10 non-tax paying estates.
It follows recommendations from the Office of Tax Simplification to reduce administrative burdens for those dealing with inheritance tax.
Jesse Norman, the Financial Secretary to the Treasury, said: “We want to cut red tape and make the tax system as simple as possible for people to use, especially during difficult times. The change is part of our wider drive to remove unnecessary paperwork and obstacles so that taxpayers can manage their affairs with less effort.” Details of the plans for an online sales tax will be in an interim report to the Treasury’s business rates review, which will include a summary of responses to last year’s call for evidence. The conclusion will be published in the autumn.
The Sunday Telegraph disclosed last month that Rishi Sunak, the Chancellor, was looking at options to tax online retail more heavily as part of this review, including the possibility of a new “green” tax on every internet delivery, alongside other online tax ideas.
Tuesday is Tax Day, when the Treasury will float a series of proposals to “reform” the tax system: in other words, to find new ways to squeeze more money from taxpayers. The deficit is far too big, but the last thing we need is further tax increases after the crippling, historic raid unleashed at the Budget. There must be only one priority for fiscal policy: the strongest possible recovery as lockdown ends, and then a permanent increase in the trend rate of economic growth.
Weak growth since the financial crisis is the greatest economic problem facing Britain, and at the heart of many of our other ailments. We need a permanent step upwards in the rate at which GDP expands if we are not to turn into a dysfunctional, sluggish, declinist society fighting itself for scarce resources. Faster growth would rescue us from the present conflict-ridden approach to politics, where one group can only win if another loses.
The Chancellor should therefore say no to increases in capital gains tax, to an assault on pension tax relief and to a pay-as-you-go tax model for freelancers and investors, which would be bureaucratic, undermine their ability to manage their financial affairs and deter entrepreneurial effort.
The Treasury’s focus is on budget-keeping, which is understandable in one sense, given the damage done by the virus itself, by the lockdown and the vast sums we are still forking out to pay for it. But why does it not focus its attention on eliminating wasteful or unnecessary spending? Why tax hikes? Governments cannot tax their way out of an economic crisis. If the Conservatives try to do so, they will also destroy the opportunities opened by Brexit.