UK:
Announcement of legislation to confirm existing concessionary practice on the treatment of capital sums in pension schemes on death
22 March 2006
by
Deloitte
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Commenting on the announcement of legislation to confirm existing concessionary practice on the treatment of capital sums in pension schemes on death, applying up to the age of 75, Stuart Davies, wealth advisory director at Deloitte, said:
"This confirms our present understanding of the position that capital paid out from pension schemes on death before age 75 (and before benefits are drawn) will not be subject to inheritance tax (IHT).
"However, the Government is concerned at the potential for using Alternatively Secured Pensions, available from age 75, to enable individuals to pass on capital to their beneficiaries rather than to provide a pension. Legislation will be introduced so that capital paid to beneficiaries other than a spouse, civil partner or financial dependant (or to a charity) will form part of the deceased's estate for IHT purposes.
"Furthermore, any 'left-over funds' in the hands of the surviving spouse, civil partner or financial dependant on their own death, will form part of their estate for IHT."
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