Inheritance tax was introduced in 1984 to replace the old capital transfer tax. It was designed to target intergenerational transfers of assets amongst the very wealthiest echelons of society with a range of generous exemptions and reliefs meaning that for the man in the street it was a non-event. 

However, with the extraordinary increase in house prices witnessed in the early part of the twenty-first century coupled with the freezing of the nil-rate band at £325,000 since April 2009 more and more estates are now liable to the tax. 

The tax itself is convoluted and difficult to understand with liabilities often arising unexpectedly as a result of gifts to family members and transfers to trust. The introduction of the residential nil rate band in April 2017 although welcomed in principal as means to avoid the tax levy on the family home has proved to be problematical for both advisors and taxpayers alike due to the stringency of the eligibility criteria and the interaction with other forms of tax planning, particularly the use of trusts.

 As a result this proposal by the Office of Tax Simplification is to be welcomed. A reduction of the seven gifting year rule to five years would make record keeping and retrieval less onerous for estate executors and administrators. Scrapping the confusing  multitude of small exemptions and replacing them with one lifetime allowance also seems to be a sensible approach. 

Overall the package of changes seeks to bring clarity to the tax regime whilst maintaining an important revenue stream for the government. It remains to be seen which will be adopted and whether they will have the desired effect.