Pension Transfers and IHT

It is generally accepted that a pension transfer, or significant payment into a pension scheme, will not normally have inheritance tax (IHT) consequences unless the transfer was made when the client was aware that they were in poor health and death occurs within two years of the transfer. 

HMRC lost a recent appeal case, HMRC v Representatives of Staveley (deceased) and the outcome of this appeal has changed the previously accepted IHT position.

Mrs Staveley transferred a S32 pension following an acrimonious divorce into a personal pension so her ex-husband could not benefit. The pension monies were designated to benefit her sons in the event of her death. She died shortly after the transfer was made and HMRC decided the transfer was chargeable for IHT. 

The HMRC decision was ultimately overturned because the Appeal Court found that the driver behind the advice was for her ex-husband not to benefit from the pensions and there was no intention to avoid IHT. 

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

This is a very good example of client specific drivers supporting the right advice.

Advisers involved with Pension Transfer advice need to take extra care when the client is in ill health at the intended time of transfer.

 

Action Required By You

  • Ensure all pension advisers, not just pension transfer specialists, are aware of this case;
  • Document soft facts thoroughly.

About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

Contact Us

Explore more articles in this category

Other articles that you might be interested in