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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: procedure when an ASP charge arises - death of scheme member: charge under IHTA84/S151A

If the money in the ASP fund is expended on relevant dependant’s benefits within 6 months of the end of the month in which the death occurred no charge will arise on the scheme member’s death; nor will any charge arise where the leftover funds are paid to charity.

Where the 6 month limit is breached, or the funds are used for the benefit of a dependant who is not a relevant dependant a charge to Inheritance Tax will arise on the scheme member’s death. The scheme administrator is responsible for delivering an account on form IHT100 and event form IHT100g. The funds should be assessed as aggregable property (IHTM17355) and the tax collected from the scheme administrator.

Because of other rules governing pensions, scheme administrators are required to keep the valuation of the fund up to date and on an open market basis. We have agreed therefore that scheme administrators do not have to provide a breakdown of the assets (other than that contained in the IHT100) so no supplementary pages will be delivered. If however the estate is taken up for enquiry and there are substantial (over £100,000) assets returned either as land or unquoted shares you should ask the scheme administrator to provide details of the underlying assets and have them valued in the normal way.

Because of the wording of IHTA84/S151A(2) which requires tax to be charged on a ‘relevant amount’ (IHTM17355), no reliefs or exemptions, such as agricultural or business relief, can apply to property in an ASP fund so tax is charged on a sum representing the value of the assets rather than on the individual assets themselves.

For the same reason the instalment option is not available either.

No further charge can arise once the funds have been taxed on the scheme member’s death so the file may be closed in the normal way with no need for future review.