SP 10/86 reads
‘Death benefits under superannuation arrangements
The Board confirm that their previous practice of not charging capital transfer tax on death benefits that are payable from tax approved occupational and retirement annuity schemes under discretionary trusts also applies to Inheritance Tax
The practice extends to tax under the gift with reservation rules as well as to tax under the ordinary inheritance rules.’
It follows that in an approved (
IHTM17020) scheme where the death
benefit is held on discretionary trusts under the scheme rules, the
gift with reservation (
IHTM14025) provisions will not apply
where the deceased or the deceased’s estate or the
deceased’s personal representatives (
IHTM05012) are potential beneficiaries.
In an unapproved (
IHTM17024) scheme (including a
sponsored superannuation scheme) the gift with reservation
provisions will apply in this scenario and the death benefits will
be liable to IHT on the member's death.
All unapproved schemes should be referred to the Pension
Specialist in TG in IHT Edinburgh as part of the procedure (
IHTM17011) for examination of form
IHT409 (
IHTM10035).
