Standard Life welcomes plans to increase IHT reporting limit

Standard Life has welcomed the announcement that HMRC intends to increase the inheritance tax reporting limit for certain types of gift in tax year 2007-08, from £10,000 to £200,000.

The announcement was made in a Circular from the ABI to its members.

Currently any chargeable transfer over £10,000 needs to be reported to HMRC on forms IHT100 and IHT100a. Together these add up to 12 pages of compliance for the taxpayer. The accompanying notes on how to complete the IHT100 form are detailed and daunting, stretching to 80 pages. It was hoped that the reporting figure would be increased more quickly after the significant Budget changes in March 2006, but initial hopes of an early increase failed to translate into new regulations. This means that anyone who has made a gift of over £10,000 to a flexible or discretionary trust since 22 March 2006 needs to file these forms.

Commenting on the announcement, Julie Hutchison, Standard Life’s Estate Planning Specialist said: “The current reporting levels create problems for both taxpayers and HMRC since there is unnecessary paperwork required for very small gifts. I welcome the news that the increases are due to be introduced for the new tax year ahead. This will significantly reduce the administrative burden for tax payers and their advisers, a burden which was unwarranted and should have been addressed more quickly. The new levels announced will remove a huge compliance burden for many clients making gifts to a trust, but I will reserve final judgement until the details of the regulations are released. For example, I will be keen to see what this means for the reporting requirements for trustees at ten year anniversaries, which should also be addressed and removed for trusts which do not face an IHT bill in year ten.”