There will be a transfer of value ( IHTM04024) if a contribution is made to a separate pension scheme which provides benefits solely for persons other than the contributor although exemption will usually be available under the normal out of income ( IHTM14231) rules or spouse or civil partner exemption ( IHTM11031) ( IHTM11032).
There are also three specific situations which you should be aware of where the taxpayer may claim there is no transfer of value under IHTA84/S12. You should refer any claim under one of these situations to the pension specialist in TG at IHT Edinburgh. The three situations cover
Under IHTA84/S12 (1) a disposition ( IHTM04023) is not a transfer of value if it is allowable in computing the transferor’s profits or gains for the purposes of income tax. Payments of contributions to an approved ( IHTM17020) pension scheme may be allowable for income tax purposes but the allowance is in the form of a deduction or set off against the ‘relevant earnings’ of the person making the contribution. Relief under IHTA84/S12 (1) is therefore not appropriate in this scenario - the payment of the contribution is not allowable in computing the contributor’s profits for income tax purposes. Rather the contribution is or may be a deduction from ‘relevant earnings’ and these are calculated after computing the person’s profits for income tax purposes.
Under IHTA84/S12 (2)(b) in certain circumstances contributions to a pension scheme which provide benefits on or after retirement for an employee or his widow/surviving civil partner or dependants is not a transfer of value.
Contributions under approved pension schemes (occupational ( IHTM17021) and personal ( IHTM17022)) entered into by an employee of the person making the disposition are not transfers of value under IHTA84/S12 (2)(a) and (c).