Treasury Responds To OTS Reviews
The Treasury has responded to the Office of Tax Simplification (OTS), following its review of Capital Gains Tax (CGT) and Inheritance Tax (IHT). The extensive review covered various aspects of tax including rates, administration, interaction with other taxes and how it may influence the investment decisions of individuals.
Five of the recommendations given in the OTS reports have been accepted by the Treasury, which are as follows:
- The extension of the reporting and payment deadline for the UK property return from 30 days to 60 days.
- The reporting and payment of CGT to be incorporated into the Single Customer Account.
- The ‘no gain no loss’ window on separation and divorce is to be extended, and a consultation on the detail will follow over the course of the next year.
- Rollover Relief will be expanded to cover reinvestment in the form of enhancing land already owned, consultation on the detail will follow in due course.
- To review and improve the HMRC guidance on the UK Property Tax Return, Business Asset Disposal Relief (BADR), land assembly arrangements, and several other areas.
Perhaps the biggest concerns in the initial reports were the suggestions about the overhaul of IHT, the suspected increase in CGT rates to align them with Income Tax and the potential reduction or removal of the annual exemption. However, the Treasury has confirmed that, following careful consideration, the Government has decided not to proceed with any changes at the moment which will come as a relief for many, given there was scope for a radical reform to valuable reliefs that are currently in place.
Although many will let out a sigh of relief, the letter clearly states that the Government will continue to keep the tax system under constant review to ensure it is simple and efficient so although no changes are expected any time soon, it doesn’t mean that this won’t happen in future.
You can read the full response, including areas still under consideration here.