Under IHTA84/S153 certain overseas pensions are left out of
account in determining the value of a person’s estate (
IHTM04029) immediately before their
death. See the part of the table at IHTM17132 (
IHTM17132) dealing with overseas
service for further details.
Where a UK domiciliary (
IHTM13000) is a member of an overseas
pension scheme although the scheme cannot be ‘approved’
(
IHTM17121) for IHTA84/S151 purposes it
may well still qualify as a sponsored (
IHTM17122) superannuation scheme. On
the death therefore the relieving provisions of IHTA84/S151 will
still apply to any pension rights terminating and in respect of the
pension scheme discretionary trusts itself.
Where the member dies in service and a death benefit (
IHTM17030) is paid the IHT treatment is
along the normal lines (
IHTM17052) and depends on the terms of
the pension scheme in question and, in particular, the rules
governing payment of the lump sum death benefit.
If the death benefit is held by the trustees of the pension
scheme on discretionary trusts as regards payment then no claim
will arise and IHTA84/S151 may apply (see
IHTM17121 (
IHTM17121)). If however the payment is
due to the estate as of right (
IHTM17052) or if the member has a
general power (
IHTM17081) of appointment over the
funds or if they have assigned rights (
IHTM17071) into trust whilst in ill
health or where they can withdraw the funds at any time then a
charge to IHT may arise.
The concept of a trust is alien in many overseas countries
(although the type of pension foundation found in Switzerland and
the Netherlands is sometimes considered to be somewhat akin to a UK
trust arrangement). It follows that there is not usually a degree
of discretion in those arrangements which would mirror a UK trust
and they are therefore generally vulnerable to an IHT claim.
Details of lump sums payable under overseas pensions should
be included in the form IHT409 (
IHTM10035) at boxes 8 to 15 and will be
considered by the Pension Specialist in TG at IHT Edinburgh.
As overseas pension schemes are not approved they are not
covered by SP10/86 (
IHTM17073). The funds in a pension
scheme are regarded (
IHTM17125) as provided by the employee
whether contributed by the employee or the employer and accordingly
the employee would be regarded as the settlor of any trust
affecting these funds. If the employee were a beneficiary or
possible beneficiary under these trusts the question of a
reservation of benefit (
IHTM14025) pursuant to FA86/S102 would
be relevant.
Claims under this head will normally be identified by TG on
examination of the Trust Deed or Scheme Rules.
