Since the report of the catchily named All Party Parliamentary Group for Inheritance and Inter-generational Fairness ("the APPG") was published back in January 2020, there has been much talk amongst UK private client practitioners regarding the potential overhaul of the inheritance tax system.

STEP also recently conducted a survey amongst its members on attitudes to the current system and garnered opinion on ways in which it could be reformed. Indeed the results of that survey indicated that STEP members supported the APPG's recommendations to introduce a flat rate gift tax and remove the complex array of IHT reliefs and exemptions, not only as a way of discouraging avoidance by wealthier families but also as a means to pay for the government's spend on the Covid-19 pandemic.

Whilst the Spring Budget didn't introduce any such sweeping changes, the government's recent "Tax Day" on 23 March saw the publication of policy making documents which were intended to provide a comprehensive roadmap for the long term development of the overall tax system. Initial reaction from private client practitioners suggests that not enough has been done to move away from the piecemeal approach to tax reform and provide a clear and cohesive strategy relating to Capital Gain Tax (CGT), Inheritance Tax (IHT) and the taxation of trusts. However amongst the policy documents were a few interesting changes relating to the administration of estates.

One key policy relates to the reporting requirements for small estates where no IHT is payable. In 2019 the Office of Tax Simplification produces a report with recommendations as to how IHT could be simplified, one of which was to reduce the reporting requirements for IHT event. This particular recommendation has been accepted by the government and so from 1 January 2022 it is removing the need for around 90% of such estates to submit an IHT form as part of the process for applying for a Grant of Probate. Given that only around 5% of UK estates pay IHT in the first place, this development could significantly reduce the administrative burden on the majority of personal representatives during the course of administering smaller estates and those estates in which the surviving spouse or civil partner is the main beneficiary. Further explanation and regulations as to how this will actually work in practice are awaited.

Greater digitisation of IHT reporting for trusts and estates is also being considered, although it will be interesting to see how this relates to Northern Ireland, as there is currently no provision for online submission of IHT forms in this jurisdiction in the way that there is in England & Wales.

Still no decisions have been announced in relation to the wider reform of IHT or CGT, even though these are now seen as inevitable by most, and although the OTS report of 2019 had raised a number of significant concerns regarding the current system for the taxation of trusts, the government has indicated that it does not see any need for comprehensive reform in this area for the time being.

So although "Tax Day" had been hotly anticipated by some, it turned out to be rather underwhelming for private client practitioners, with one commentator describing it as a "snooze fest". Rather than getting the comprehensive roadmap that was hoped for, we received an assorted bundle of consultation responses, calls for evidence and discussion documents. We continue to watch this space for further developments.

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