RPSM04106020 - Technical pages: Taxation: Inheritance tax and unauthorised payment tax charges on alternatively secured pension funds and dependants’ alternatively secured pension funds

This guidance only applies to individuals who died before 6 April 2011. If the member reached age 75 between 22 June 2010 and 5 April 2011 you should also see RPSM17100070.

For deaths or omissions to exercise pension rights that occur on or after 6 April 2011 see guidance in the Inheritance Tax Manual at IHTM17000.

Death on or after 6 April 2007

When a member of a registered pension scheme dies on or after reaching age 75 with funds remaining in an alternatively secured pension fund, it is possible that the scheme administrator will have to account for inheritance tax in respect of those remaining funds. Where the death occurs on or after 6 April 2007 and depending on how those remaining alternatively secured pension funds are applied, there could be an unauthorised payment in relation to those funds. Effectively, this could mean that the unauthorised payments charge, the unauthorised payments surcharge the scheme sanction charge and inheritance tax can apply in relation to the remaining alternatively secured pension funds on death.

RPSM04106030 and RPSM04106040 give examples of where the tax charges in respect of an unauthorised payment are due in relation to remaining alternatively secured pension funds but not inheritance tax.

RPSM04106050 and RPSM04106060 give examples of where both the tax charges in respect of an unauthorised payment and inheritance tax are due in respect of remaining alternatively secured pension funds.

Also, when the dependant of a member dies on or after reaching age 75 with funds remaining in a dependants’ alternatively secured pension it is possible that the scheme administrator will have to account for inheritance tax in respect of those remaining funds as well. Similarly, if those remaining funds are applied in such a way that an unauthorised payment occurs, the tax charges relating to such payments would also apply in relation to those funds. RPSM04106060 and RPSM04106070 give examples.