Sign up for our FREE monthly newsletter

Don't miss out on amazing content

Part of our vision is to share our expert insight and knowledge to help business owners achieve success. Sign up today!

Client PortalXERO LoginClient Services Brochure
Download our Client Services Brochure

When IHT applies to Pensions

POSTED BY: Jenna Hann

06 December 19

Inheritance Tax (IHT) is levied on a person’s estate when they die and can also be payable during a person’s lifetime on certain trusts and gifts. The rate of Inheritance Tax payable is 40% on death and 20% on lifetime gifts. There is a nil-rate band, currently £325,000 below which no Inheritance Tax is payable.

A pension is normally free of IHT and unlike many other investments is not counted as part of a deceased persons taxable estate. However, any money taken out of a pension before death becomes part of the deceased estate and could be subject to IHT. This includes any tax-free cash allowance which might not have been spent.

IHT charges relating to pensions can arise in relation to the following:

  • Lifetime transfers
  • Benefits within the estate
  • General power over benefits
  • Omission to exercise a right
  • Alternatively secured pensions

THE LATEST NEWS & BLOG POSTS FROM TEAM CB

Gift Hold Over Relief

Giving away an asset and concerned about Capital Gains Tax?

Parents with Benefits

Do you claim Child Benefit and earn more than £50,000?

Basic Income Tax Reliefs

​It’s the season to be planning!