The Office for Tax Simplification (OTS) was instructed to look at the Inheritance Tax regime to see if it could be simplified. There were a number of sensible suggestions for reform, but they were overshadowed by one reform that so defeats the object of simplification that one wonders how it got through. Perhaps it is a question of not seeing the wood for the trees!
At present generally when an asset passes through inheritance, the asset is rebased at the probate value. IHT will often have been paid on the asset by the estate and then it will pass to the beneficiary at its probate value. This has two advantages; one a valuation will have been agreed of the asset and secondly it puts an effective limit on the records that the beneficiary has to keep. Without the uplift of probate value, there is no time limit to the records required if an individual disposes of an asset which might have been held in the family for generations. Not only is this a form of double-taxation because the asset might have been subject to IHT on successive transfers but also means keeping records almost indefinitely.
I cannot see how this simplifies taxation; it only makes it more onerous for what is probably not a large yield. I suggest the OTS go back to the drawing board.
Primondell runs a number of courses on IHT planning and Jeremy Mindell is participating in an IHT conference on the 9thDecember 2019