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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Pre-owned assets: insurance based products: pension policies

Pension policies may typically provide pension and lifetime benefits for the scheme member, and other benefits that are payable on death at the discretion of the scheme trustees. The pension and other lifetime benefits are either unsettled property or held in a trust separate from that on which the death benefits are held.

In this arrangement, both parts can be treated as mutually exclusive and therefore provided the scheme member could not benefit from the trusts governing the death benefits, a POA charge will not arise.

A charge under FA04/Sch15 will not arise in relation to pension arrangements under registered pension schemes (previously approved pension arrangements). Neither do such arrangements give rise to a reservation of benefit (IHTM17073). With non-registered schemes, however, a reservation of benefit may well arise (IHTM17504) in which case the same transactions would not be subject to the POA charge.