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HMRC internal manual

Inheritance Tax Manual

Pensions: treatment of alternatively secured pensions from 6 April 2007: no double charge under IHTA84/S151A and IHTA84/S151C

There was never any intention to charge IHT more than once on left over ASP funds on the death of a scheme member. This subtlety was not however sufficiently clearly drawn out in the original FA 2006 provisions. IHTA84/SS151C(3D) now makes it quite clear that regardless of the timing of the designation by the scheme of the member’s left over ASP funds for the payment of dependant’s unsecured or alternatively secured pensions those funds are excluded from any Inheritance Tax charge on the left over funds on the death of a dependant with an ASP. So, we have a charge under IHTA84/S151A on the death of the scheme member in ASP but no second charge under IHTA84/S151C on the death of the dependant.

The specific scenario envisaged is where the member dies in Alternatively Secured Pension but funds are not designated to provide dependant’s benefits within the 6 month deadline in IHTA84/s151A(3)(b). So there is a charge under IHTA84/s151A on the member’s death. As the 6 months criteria has been missed, when the dependant dies the potential charge would be under IHTA84/s151C and not IHTA84/s151B (as the third condition within IHTA/s151B(1)(c) has not been met). IHTA84/s151(C)(3D) ensures there is no second charge on the death of the dependant