IHTM43047 - Interaction with alternatively secured pensions: deceased’s estate includes funds in an alternatively secured pension
The IHT provisions for alternatively secured pensions (ASP) have been changed to reflect the interaction of an ASP charge with the transfer of unused nil rate band. Currently, a charge arises on left-over ASP funds once a relevant dependant’s pension benefits cease and the rates of tax are those applying at the date of that event rather than as at the date of death of the scheme member. This rule is modified so that, if the IHT nil-rate band was not fully used when the original ‘owner’ of the ASP died, the same proportion that was unused will be applied to the amount of the nil rate band in force at the date of the later event and be available against the charge on the ASP funds.
In addition, a similar procedure to that applying to recapture charges on conditionally exempt property and woodlands is appropriate to ASP charges, to recognise whether the ASP charge arises before or after the death of the survivor.