When Inheritance Tax applies to pensions

Topic: When Inheritance Tax applies to pensions

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

Please Email us now:info@makesworth.co.uk or Call: 020 7993 8850

To know more on When Inheritance Tax applies to pensions Book a Free Consultation