RPSM17100070 - Technical pages: Treatment of persons at age 75: IHT
This guidance applies to individuals who died between 22 June 2010 and 5 April 2011 having reached the age of 75 on or after 22 June 2010.
Changes for the transitional period: IHT
|[Sections 151A-151D and section 3(3) Inheritance Tax Act 1984]|
The interim measure provided in the Finance (No 2) Act 2010 so that members of registered pension schemes who reach age 75 on or after 22 June 2010 will not have to buy an annuity or otherwise secured pension income until they reach age 77 will also apply for the purposes of the Inheritance Tax charges that currently apply to pension scheme members aged 75 and over.
|[S151A - C IHTA84]|
These specific charges included in s151A - s151C IHTA84 are linked to the pension tax rules and the definition of the different pension benefits. It follows therefore that the changes to the definition of an alternatively secured pension in Schedule 28 to FA2004 so that it applies only from age 77 onwards will automatically follow through for the purposes of the Inheritance Tax provisions. So e.g. if a member of a registered pension scheme turns 75 on or after 22 June 2010 and dies on 20 July 2010 he will not have an alternatively secured pension and the charge under s151A IHTA will not apply.
Similarly s151A IHTA84 will not apply in the case where the whereabouts of a person who turns 75 on or after 22 June 2010 are unknown. Even if paragraphs 11(6) and (7) of Schedule 28 to FA2004 were omitted (in accordance with s151A(6)IHTA84) the person would not have an alternatively secured pension fund.
Where a person has become 75 before 22 June 2010 at a time when his whereabouts were unknown then if he dies after that date s151A IHTA84 will have effect in relation to him as provided for by s151A(6) and (7) IHTA84.
The changes do not however follow through for the purposes of the anti- avoidance provisions at s151D IHTA84. These charges are triggered by an unauthorised payments charge and unlike the charges on alternatively secured pension funds do not apply automatically when a scheme member dies ─ see IHTM 17600 for details.
The changes still leave the prospect of a charge to Inheritance Tax under s3(3)IHTA84 where the member of a registered pension schemes has reached age 75 and dies having deliberately omitted to take his retirement benefits so that the death benefits can pass to his chosen beneficiaries.