So the Budget did not bring any significant changes to Inheritance Tax (IHT) but are changes in the pipeline when the Office of Tax Simplification's report is published before the end of the year? Based on the OTS's remit the answer should be no. As Paul Morton, the OTS Tax Director said when the OTS published its call for evidence in April, "In a nutshell, while tax rates are for government, the role of the OTS is to challenge tax complexity and so help all users of the tax system..."
What is beyond doubt is the complexity of the IHT regime. The recently introduced Residence Nil Rate Band legislation is a classic example of this. Let’s hope that the report makes some sensible recommendations to overhaul and simplify the regime.
Whether you agree with the Institute for Fiscal Studies that the IHT system is "indefensibly generous" depends on your viewpoint. As this article points out, tax raised for IHT is going up year on year, most recently to £5.2bn for the 2017/18 tax year, although it was widely reported in May that IHT accounts for just 77p of every £100 of taxation.
There are certainly areas where more and more planning is taking place to shield wealth from IHT, the use of Business Relief being a prime example and the regular gifts out of income exemption being another. Will the OTS's report contain recommendations that impact on the use of reliefs and exemptions such as these? Tax simplification is the primary purpose of the report, but if the recommendations, once implemented, result in a simplification of an overly complex tax regime and at the same time restrict some well used IHT reliefs and exemptions then everyone is a winner, at least in the government's eyes.
A review on inheritance tax will be published before the end of the year, despite not being mentioned during yesterday's Budget. Earlier this year Chancellor of the Exchequer Philip Hammond wrote to the Office of Tax Simplification asking it to review inheritance tax because of concerns the system was "particularly complex".