It has been announced that the Public Accounts Committee has launched an inquiry into whether the tax reliefs currently available to taxpayers offer “value for money”.
There are some reliefs (those with the perceived greatest “cost”) that will clearly be in the cross-hairs including, for example:
Relief for pension contributions;
Entrepreneurs’ Relief for Capital Gains;
Inheritance Tax Relief Business Property and Agricultural Property Reliefs (BPR and APR).
The relief for pension contributions is a regular for consideration at every Budget. Entrepreneurs’ Relief has just been dramatically cut such that the maximum lifetime gain to which it can apply is now just £1m.
Within the last year or so there have been two major reports looking at IHT, one commissioned in January 2018 by the then Chancellor of Exchequer by the Office For Tax Simplification and one by an All Party Parliamentary Group of MPs published in January this year. Both made comments in relation to BPR and APR, ranging from restrictions in their applicability through to complete scrapping.
Both, of course, predated Coronavirus, the lock down, and the billions being spent by Government on trying to support the economy.
It is safe to say that there will need to be an increase in tax take in one form or another in order to fund this spending – and the Prime Minister continues to rule out hikes in income tax or national insurance. Other things being equal, given the likelihood of reduced consumer spending, reduced profits, redundancies and business closures likely to come, the tax take would reduce rather than increase as needed.
Against this back-drop it becomes increasingly difficult to see how BPR and APR will survive in their current form.
It is rarely wise to take action purely for tax reasons – particularly when trying to anticipate future changes to legislation. However, where consideration is already currently being given to making gifts, particularly where it is envisaged that BPR/APR (or indeed holdover relief for capital gains tax) will be utilised, there is a case for looking at advancing such plans to take advantage of the current legislation.