Inheritance Tax Act 1984

Valid from 06/04/2006

151APerson dying with alternatively secured pension fundU.K.

(1)This section applies where a member of a registered pension scheme has an alternatively secured pension fund in respect of an arrangement under the pension scheme immediately before his death.

(2)In determining for the purposes of this Act the value of his estate immediately before his death he shall be treated as if he had been beneficially entitled to property with a value equal to the relevant amount.

(3)The relevant amount is—

(a)the aggregate of the amount of the sums and the value of the assets forming part of the member's alternatively secured pension fund immediately before his death, less

(b)the aggregate of the amount of the sums and the value of the assets expended on dependants' benefits within the period of six months beginning with the end of the month in which his death occurs.

(4)For this purpose sums or assets are expended on dependants' benefits at any time if they (or sums or assets directly or indirectly deriving from them) are at that time—

(a)applied towards the provision of a dependants' scheme pension for a relevant dependant,

(b)applied towards the provision of a dependants' annuity for a relevant dependant,

(c)designated as available for the payment of dependants' unsecured pension to a relevant dependant, or

(d)designated as available for the payment of dependants' alternatively secured pension to a relevant dependant,

or if the sums (or sums directly or indirectly deriving from the sums or assets) are at that time paid as a charity lump sum death benefit.

(5)In this section—

• “alternatively secured pension fund” has the same meaning as in Part 4 of the Finance Act 2004 (see paragraph 11 of Schedule 28 to that Act);

• “charity lump sum death benefit” has the meaning given by paragraph 18 of Schedule 29 to that Act;

• “dependants' alternatively secured pension” has the meaning given by paragraph 19 of Schedule 28 to that Act;

• “dependants' annuity” has the same meaning as in Part 4 of that Act (see paragraph 17 of that Schedule);

• “dependants' scheme pension” has the same meaning as in that Part of that Act (see paragraph 16 of that Schedule);

• “dependants' unsecured pension” has the meaning given by paragraph 18 of that Schedule; and

• “relevant dependant”, in relation to a member of a registered pension scheme who dies, means a dependant (within the meaning of paragraph 15 of that Schedule) who—

  (a)

  is the person's spouse or civil partner immediately before his death; or

  (b)

  is financially dependent on the person at that time.

Valid from 06/04/2006

151BRelevant dependant with pension fund inherited from member over 75U.K.

(1)This section applies where—

(a)a relevant dependant of a person who, immediately before his death, was a member of a registered pension scheme has a dependant's unsecured pension fund, or a dependant's alternatively secured pension fund, in respect of an arrangement under the pension scheme immediately before his death or immediately before ceasing to be a relevant dependant of the member,

(b)the member had reached the age of 75 at the time of his death and had an alternatively secured pension fund in respect of an arrangement under the pension scheme immediately before his death, and

(c)sums or assets forming part of that fund were designated as available for the payment of dependants' unsecured pension, or dependants' alternatively secured pension, to the relevant dependant within the period of six months beginning with the end of the month in which the member's death occurs.

(2)Where this section applies tax shall be charged under this section.

(3)The amount on which tax is charged under this section shall be the aggregate of the amount of the sums and the value of the assets forming part of the dependant's unsecured pension fund, or the dependant's alternatively secured pension fund, in respect of the arrangement immediately before the relevant dependant died or ceased to be a relevant dependant of the member.

(4)But where tax is chargeable under this section by reason of the death of the relevant dependant, that amount is reduced by so much of sums forming part of the dependant's unsecured pension fund, or the dependant's alternatively secured pension fund, (or sums directly or indirectly deriving from sums or assets forming part of that fund) as are paid to a charity within the period of six months beginning with the end of the month in which his death occurs.

(5)Tax charged under this section shall be charged at the rate or rates at which it would have been charged on the death of the member if—

(a)the amount mentioned in subsection (3) above (as reduced under subsection (4) above) had been included in the value transferred by the chargeable transfer made on his death, and

(b)the amount on which the tax is charged had formed the highest part of that value.

(6)In this section—

• “alternatively secured pension fund” has the same meaning as in Part 4 of the Finance Act 2004 (see paragraph 11 of Schedule 28 to that Act);

• “dependants' alternatively secured pension” has the meaning given by paragraph 19 of that Schedule;

• “dependant's alternatively secured pension fund” has the same meaning as in that Part of that Act (see paragraph 25 of that Schedule);

• “dependants' unsecured pension” has the meaning given by paragraph 18 of that Schedule;

• “dependant's unsecured pension fund” has the same meaning as in that Part of that Act (see paragraph 22 of that Schedule); and

• “relevant dependant”, in relation to a member of a registered pension scheme who dies, means a dependant (within the meaning of paragraph 15 of that Schedule) who—

  (a)

  is the person's spouse or civil partner immediately before his death; or

  (b)

  is financially dependent on the person at that time.

Valid from 19/07/2007

[F7151BARate or rates of charge under section 151BU.K.

(1)Tax charged under section 151B above shall be charged at the rate or rates at which it would be charged on the death of the member if the amount mentioned in subsection (3) of that section (as reduced under subsection (4) of that section) (“the taxable amount”) had been included in the aggregate mentioned in section 151A(3)(a) above (but subject as follows).

(2)The rate or rates at which tax is charged on the taxable amount shall be determined as if the taxable amount had formed the very highest part of the value of the member's estate immediately before the member's death (above any amount which is part of that value apart from this section).

(3)The rate or rates at which tax is charged on the taxable amount shall be determined on the assumptions that—

(a)subsection (3)(b) of section 151A above were omitted, and

(b)the references in subsections (4A) and (5) of that section to the time when tax is charged on the transfer treated as made by the member on death were to the time when tax is charged under this section.

(4)Subsection (5) below applies where, before the time when the dependant dies or ceases to be a relevant dependant, there have been one or more reductions of tax by virtue of the coming into force of a substitution of a new Table in Schedule 1 to this Act since the member's death.

(5)The rate or rates at which tax is charged under section 151B above is to be determined as if the new Table effecting the reduction of tax (or the most recent reduction of tax) had been in force at the time of the member's death.]

Valid from 06/04/2006

151CDependant dying with other pension fundU.K.

(1)This section applies where—

(a)a dependant of a member of a registered pension scheme has a dependant's alternatively secured pension fund in respect of an arrangement under the pension scheme immediately before his death, and

(b)section 151B above does not apply.

(2)In determining for the purposes of this Act the value of the dependant's estate immediately before his death he shall be treated as if he had been beneficially entitled to property with a value equal to the relevant amount.

(3)The relevant amount is—

(a)the aggregate of the amount of the sums and the value of the assets forming part of the dependant's alternatively secured pension fund immediately before his death, less

(b)so much of sums forming part of the dependant's alternatively secured pension fund (or sums directly or indirectly deriving from sums or assets forming part of that fund) as are paid as a charity lump sum death benefit within the period of six months beginning with the end of the month in which his death occurs.

(4)In this section—

• “charity lump sum death benefit” has the meaning given by paragraph 18 of Schedule 29 to the Finance Act 2004;

• “dependant” has the meaning given by paragraph 15 of that Schedule 28 to that Act; and

• “dependant's alternatively secured pension fund” has the same meaning as in Part 4 of that Act (see paragraph 25 of Schedule 28 to that Act).

Valid from 21/07/2008

[F8151DUnauthorised payment where person dies over 75 with pension or annuityU.K.

(1)This section applies where—

(a)a member of a registered pension scheme, or a dependant of such a member, dies after reaching the age of 75;

(b)immediately before death the member or dependant has under the pension scheme an actual right to payments under a relevant pension or relevant annuity or a prospective right to payments under a relevant pension; and

(c)at any time after the death a relevant unauthorised payment is made by the pension scheme.

(2)Where this section applies tax shall be charged under this section.

(3)The amount on which tax is charged under this section shall be the difference between—

(a)the amount of the relevant unauthorised payment; and

(b)the amount of any liability to income tax which has arisen under Part 4 of the Finance Act 2004 by virtue of the making of the relevant unauthorised payment.

(4)In this section—

• “dependant” has the meaning given by paragraph 15 of Schedule 28 to the Finance Act 2004;

• “dependants' annuity” has the same meaning as in that Part of that Act (see paragraph 17 of that Schedule);

• “dependants' scheme pension” has the same meaning as in that Part of that Act (see paragraph 16 of that Schedule);

• “lifetime annuity” has the same meaning as in that Part of that Act (see paragraph 3 of that Schedule);

• “relevant annuity” means a lifetime annuity or dependants' annuity purchased by the application of sums or assets held for the purposes of the pension scheme;

• “relevant pension” means a scheme pension or dependants' scheme pension provided by the scheme administrator or as a result of the application of sums or assets held for the purposes of the pension scheme;

• “relevant unauthorised payment” means an unauthorised payment (within the meaning of Part 4 of the Finance Act 2004: see section 160(5) of that Act) which—

  (a)

  consists of the payment of a lump sum in respect of the dead member or dependant; or

  (b)

  is treated as made by virtue of the operation of section 172B of that Act by reason of the death; and

• “scheme pension” has the same meaning as in Part 4 of that Act (see paragraph 2 of Schedule 28 to that Act).]

Valid from 21/07/2008

[F8151ERate or rates of charge under section 151DU.K.

(1)Tax charged under section 151D above shall be charged at the rate or rates at which it would be charged if the amount on which it is charged, and any amount on which tax was previously charged under that section in relation to the death of the member or dependant, were part of the value transferred by the transfer of value made on the death of the member or dependant.

(2)The rate or rates at which tax is charged on that amount shall be determined as if that amount had formed the highest part of that value.

(3)Subsection (4) below applies where, before the time when the unauthorised payment is made, there have been one or more reductions of tax by virtue of the coming into force of a substitution of a new Table in Schedule 1 to this Act since the death of the member or dependant.

(4)The rate or rates at which tax is charged under section 151D above is to be determined as if the new Table effecting the reduction of tax (or the most recent reduction of tax) (“the applicable Table”) had been in force at the time of the death of the member or dependant, but subject to subsections (5) and (8) below.

(5)The nil-rate band maximum in the applicable Table is to be treated for the purposes of this section as reduced by the used-up percentage of the difference between—

(a)that nil-rate band maximum, and

(b)the nil-rate band maximum which was actually in force at the time of the death of the member or dependant.

(6)For the purposes of subsection (5) above “the used-up percentage” is—

(7)The following provisions apply where—

(a)tax is charged under section 151D above, and

(b)immediately before the death of the member or dependant, the member or dependant had a spouse or civil partner (“the survivor”).

(8)If the survivor died before the time when the unauthorised payment is made, tax is charged as if the personal nil-rate band maximum of the member or dependant were appropriately reduced.

(9)In subsection (8) above—

• “the personal nil-rate band maximum of the member or dependant” is the nil rate band maximum in the applicable Table, increased in accordance with section 8A above where that section effected an increase in that nil-rate band maximum in the case of the member or dependant (as a survivor of another deceased person), and

• “appropriately reduced” means reduced by the amount (if any) by which the amount on which tax was charged at the rate of nil per cent. on the death of the survivor was increased by reason of the operation of section 8A above by virtue of the position of the member or dependant.

(10)If the survivor did not die before the time when the unauthorised payment is made, tax is to be charged on the death of the survivor as if the percentage referred to in section 8A(3) above in the case of the member or dependant were that specified in subsection (11) below.

(11)That percentage is—