Rishi Sunak will cut red tape involved with UK inheritance tax and tighten tax rules for second property owners as the Treasury today released a series of consultations and reports in what Whitehall is calling “tax day”.
The measures will see the government reduce paperwork and other red tape required for people with smaller estates – up to around £1m – when it comes to inheritance tax.
There will also be a clampdown on people who falsely claim to let out their second property for holidays to pay less tax.
Many holiday lets are liable to pay business rates, rather than council tax, and can claim tax relief of up to 100 per cent.
The Treasury said today’s changes “will ensure that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let but make little or no realistic effort to actually let it out”.
Sunak will not embark on any comprehensive consultations of UK capital gains tax, pension contributions or National Insurance for self-employed as previously speculated.
The focus is more broadly on ways to cut down on tax avoidance schemes, the timing of tax bills and new qualifications for tax professionals, along with the changes to inheritance tax.
Treasury minister Jesse Norman said: “We are making these announcements in order to increase the transparency, discipline and accessibility of tax policymaking.
“These measures will help us to upgrade and digitise the UK tax system, tackle tax avoidance and fraud, among other things.”
A review will also be launched into taxing self-employed people in real time, like employees, to stop people “bending and breaking the rules”.
Self-employed workers pay tax in big installments two or three times a year, unlike employees who have it taken out of their regular wages through PAYE.
Tom Selby, senior analyst at stockbroker AJ Bell, said tax day was the “dampest of squibs”.
“While reforms to modernise the way tax is administered in the UK, reduce the inheritance tax rates burden on non-taxpaying estates and deal with tax avoidance are all laudable, this feels like a missed opportunity to tackle some fairly obvious flaws in the system,” he said.