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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Pensions: treatment of alternatively secured pensions from 6 April 2007- background

The FA07 introduced various income tax measures relating to ASPs. They are effective from 6 April 2007 and impact on the Inheritance Tax treatment of ASP funds. In the main these changes are

  • an ‘unauthorised payment’ or UP charge is introduced where an individual dies whilst in an ASP (IHTM17350)
  • there is a requirement for the amount of the ASP paid in an ‘Alternatively Secured Pension year’ to be at least 55% of the ‘basis amount’ for that year (minimum income). If the minimum income is not paid in the ASP year the scheme is treated as having made a scheme chargeable payment (subject to an income tax charge of 40%) equal to the difference between the amount actually paid and the minimum income. So, for example,
  • if nothing is paid in the year the scheme chargeable payment is equal to the minimum income that should have been paid in that year
  • the maximum amount of ASP that can be paid in an ASP year has increased from 70% of the ‘basis amount’ to 90%.
  • all IHT charges on ASPs are brought into charge as the highest part of the value transferred on death, so all the charges are top slice charges.