Philip Hammond paves way for fresh revamp of inheritance tax
Philip Hammond has suggested the Government could overhaul the "complex" system of inheritance tax.
The Chancellor has written to the Office for Tax Simplification asking it to review the generous reliefs currently on offer.
The tax raises a significant chunk of revenue for the Exchequer, delivering around £4.9bn in the 2016-17 financial year.
Under rules brought in by Mr Hammond's predecessor George Osborne, families will soon be able to pass on a main home worth up to £1m tax-free.
“Inheritance tax, and the system within which it operates, is particularly complex and I would like to request that the OTS carry out a review," Mr Hammond said in his letter.
"I would be most interested to hear any proposals you may have for simplification, to ensure that the system is fit for purpose and makes the experience of those who interact with it as smooth as possible.”
He added: “It could also look at how current gift rules interact with the wider [inheritance tax] system, and whether the current framework causes any distortions to taxpayers’ decisions surrounding transfers, investment and other relevant transactions.”
Among the possible changes could be an overhaul of exemptions that allow taxpayers to leave money tax-free during their lifetime, with no tax due unless the donor dies within seven years of making the gift.