PART 5Inheritance tax etc

94Inheritance tax: pension drawdown funds

1

IHTA 1984 is amended as follows.

2

In the italic heading before section 10, at the end insert “(and omissions that do not give rise to deemed dispositions)”.

3

In section 12(2G) (interpretation of section 12(2ZA)), in the definition of “entitled”, for “166(2)” substitute “167(1A), or section 166(2),”.

4

After section 12 insert—

12APension drawdown fund not used up: no deemed disposition

1

Where a person has a drawdown fund, section 3(3) above does not apply in relation to any omission that results in the fund not being used up in the person’s lifetime.

2

For the purposes of subsection (1) above, a person has a drawdown fund if the person has—

a

a member’s drawdown pension fund,

b

a member’s flexi-access drawdown fund,

c

a dependant’s drawdown pension fund,

d

a dependant’s flexi-access drawdown fund,

e

a nominee’s flexi-access drawdown fund, or

f

a successor’s flexi-access drawdown fund, and

in respect of a money purchase arrangement under a registered pension scheme.

3

For the purposes of subsection (1) above, a person also has a drawdown fund if sums or assets held for the purposes of a money purchase arrangement under a corresponding scheme would, if that scheme were a registered pension scheme, be the person’s—

a

member’s drawdown pension fund,

b

member’s flexi-access drawdown fund,

c

dependant’s drawdown pension fund,

d

dependant’s flexi-access drawdown fund,

e

nominee’s flexi-access drawdown fund, or

f

successor’s flexi-access drawdown fund,

in respect of the arrangement.

4

In this section—

  • “corresponding scheme” means—

    1. a

      a qualifying non-UK pension scheme (see section 271A below), or

    2. b

      a section 615(3) scheme that is not a registered pension scheme;

  • “money purchase arrangement” has the same meaning as in Part 4 of the Finance Act 2004 (see section 152 of that Act);

  • “member’s drawdown pension fund”, “member’s flexi-access drawdown fund”, “dependant’s drawdown pension fund”, “dependant’s flexi-access drawdown fund”, “nominee’s flexi-access drawdown fund” and “successor’s flexi-access drawdown fund” have the meaning given, respectively, by paragraphs 8, 8A, 22, 22A, 27E and 27K of Schedule 28 to that Act.

5

The amendment made by subsection (4)—

a

so far as relating to a fund within the new section 12A(2)(a) or (c) (drawdown pension funds), or to a fund within the new section 12A(3) that corresponds to a fund within the new section 12A(2)(a) or (c)—

i

has effect where the person who has the fund dies on or after 6 April 2011, and

ii

is to be treated as having come into force on 6 April 2011, and

b

so far as relating to a fund mentioned in the new section 12A(2)(b), (d), (e) or (f) (flexi-access drawdown funds), or to a fund within the new section 12A(3) that corresponds to a fund within the new section 12A(2)(b), (d), (e) or (f)—

i

has effect where the person who has the fund dies on or after 6 April 2015, and

ii

is to be treated as having come into force on 6 April 2015.

6

Where an amount paid by way of—

a

inheritance tax, or

b

interest on inheritance tax,

is repayable as a result of the amendment made by subsection (4), section 241(1) of IHTA 1984 applies as if the last date for making a claim for repayment of the amount were 5 April 2020 if that is later than what would otherwise be the last date for that purpose.