In a letter to the Chancellor George Osborne, Tyrie welcomed the announcement of a residence nil rate band (RNRB) for inheritance tax made in the summer Budget, but said the means by which it was being introduced and uncertainty it had caused were undesirable.
The inheritance tax-free threshold will be raised to £500,000 per person up from £325,000, allowing a combined threshold for married couples of £1m from 6 April 2020.
However, the new nil rate band will only apply to main residence and direct descendants of the owners. In addition, only homes inherited after 6 April 2017 are likely to be eligible for the changes.
Tyrie raised concerns that the rules were not ‘simple, fair and clear’ as should be required. He said the draft Finance Bill which is due to be published later this week, should address problems but noted there was a danger of adding ‘even more complexity’ to the process.
He said: “I do not advocate any particular approach. But the complexity of the proposal, as it currently stands, appears very unsatisfactory…The sooner policy can be brought to a more stable resting place, the better – in the next Budget at the latest.”
Tyrie said it was ‘unreasonable’ for older people to be forced to wait a year while the rules are written and passed into law. The main beneficiaries of such uncertainty would be tax advisers and lawyers, he added.
“Those facing the already difficult decision to move out of their family home and either downsize or move into residential care, should not have the worry of such uncertain tax law,” Tyrie said.
