Pensions: treatment of alternatively secured pensions from 6 April 2007: example where IHT due first
The scheme member dies and leaves an estate of £270,000. The IHT NRB is £300,000 and the value of the funds in their ASP is £200,000. No unauthorised payment has been made by the time IHT is due. The unused NRB (£30,000 in this case) is grossed up (IHTM17407) to £100,000.
This means that the IHT due on the ASP is (£200,000 - £100,000) × 40% = £40,000. In order to get COMPASS to produce the right result, you should
- add a new entry to the case record,
- select the ‘stats’ title ‘ASP fund chargeable from 6 April 2007’
- include the value of the ASP after deducting the grossed up NRB at £100,000
- include the NRB (not the remaining estate) in the ‘Aggregate chargeable estate’ box
You will need to write to the scheme administrator the result of the grossing up calculation, how this gives rise to the chargeable element of the ASP and the tax thereon at 40%. Explain that the figures showing on the calculation are those required to produce the tax that is due.