The inheritance tax (IHT) system should be reformed and simplified, according to an independent review commissioned by Chancellor of the Exchequer Philip Hammond.

The report, produced by the Office of Tax Simplification (OTS), in particular targets the “seven-year rule”, under which assets given away during a person’s lifetime are exempt from IHT if that person lives for at least seven years following the gift.

The OTS suggested the time limit should be reduced to five years and added that this would have a limited effect on revenues, the Financial Times reports.

In 2015/16 just £7m of a £4.4 billion IHT total came from gifts that people made more than five years before they died.

The OTS also called for the wide range of free gift allowances to be replaced by one allowance per individual. At the moment, it’s possible for a person to give away £3,000 per year without IHT being a factor, while they can also hand out an unlimited number of gifts of under £250.

These sums have not changed since the 1980s, however, and the review body pointed out the £3,000 annual limit would now be £11,000 had it risen in line with inflation.

The Treasury has said it will respond to the findings.