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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Pensions: alternatively secured pension (ASP) between 6 April 2006 and 5 April 2007: charge where surplus paid to employer

Where neither a transfer lump sum death benefit nor a charity lump sum death benefit is paid the rules of an occupational scheme may permit the surplus to be paid to the sponsoring employer. As well as the Inheritance Tax charge under IHTA84/S151A, the payment, if made to an unconnected employer, would be subject to a further tax charge of 35%, resulting in a total tax charge of 61%. If, however, the member was connected to the sponsoring employer the payment would be treated as an unauthorised payment and subject to the tax charges associated with such payments (IHTM17402).