Pensions: omission to exercise a right: no IHT charge
IHTA84/S12(2A-G) provides exclusions from potential Inheritance Tax omissions in circumstances where they might otherwise arise because of choices made by a pension scheme member which result in enhanced death benefits being paid to the member’s beneficiaries.
- Firstly, where the member deferred their pension benefits at a time when they were in good health (here the disposition is not treated as a transfer of value ─ IHTA84/S10) but subsequently, despite deterioration in their life expectancy, the member did not vary that decision, IHTA84/S12(2C).
- Secondly, where the deferral took place at a time when the member’s life expectancy was seriously impaired but the resulting death benefits were paid to their spouse or civil partner or other person who was financially dependant on them at the time of death - IHTA84/S 12(2D)(a).
- Finally, the legislation provides for a further exclusion where the payments are made to charity at IHTA84/S12(2D)(b)