Yesterday, the Government published a number of tax policies and consultations aimed at ensuring that our tax system is fit for the future. In particular, they announced additional funding to enable HMRC to improve its digital technology and to enhance the taxpayer experience.
Items that will be of particular interest to individuals include:
- The suggestion that tax should be paid “closer to earning the income”. Any possible change in the timing of when tax is paid will not, however, be introduced during the current parliament, given the current challenges that people are facing due to the Pandemic. The consultation sets out various examples of the position in other countries, and asks for comments by 13 July 2021, by email to firstname.lastname@example.org
- A welcome amendment is the decision by the Government to reduce the inheritance tax reporting requirements. This follows recommendations by the Office of Tax Simplification, and means that from 1 January 2022, the reporting regulations will be simplified. Over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms for deaths when probate or confirmation is required.
- Due to the current practical issues raised by the Pandemic, people dealing with a trust or estate have been able to provide an inheritance tax return without requiring physical signatures from all those involved. This practice will now be made permanent.
- One of the publications today summarised the responses that the Government received to an earlier consultation into the Taxation of Trusts. The Government concluded that there was no need for a comprehensive reform of the taxation of trusts. However, it did not rule out changes, as it announced that “the Government will continue to review specific areas of trust taxation on a case-by-case basis”.
- The Government also issued a discussion document on “helping taxpayers to get offshore tax right”. HMRC have recently increased their focus in this area, issuing many “nudge” letters to individuals who they believe have offshore assets. These letters are to check that taxpayers have reported all related income and gains from those overseas assets.
PEM are well placed to help people who have received these nudge letters or who are aware that they have received income or gains from offshore assets that they may not have realised needed to be reported in the UK. If you would like further help, please contact Mary Shoesmith (MShoesmith@pem.co.uk).