Pensions - Articles - New inheritance tax on pensions legislation

 The SPP response makes various suggestions for improvement to ensure the legislation better delivers the original policy intent and avoids unintended consequences.

 For example, the SPP state that the requirement for members to be in “employment” should be replaced with a requirement to be in “employment or other service” to avoid inadvertently excluding certain categories of member benefiting from the IHT exemption that applies to death in service benefits.

 The response also recommends an explicit exclusion from IHT for trivial commutation lump sum benefits.

 In addition, the SPP suggest that the requirement that the scheme administrator should pay any tax within 3 weeks from the day on which it receives the beneficiary’s notice, is too short and should be extended to 30 business days.

 Finally, the SPP response calls for greater clarity on various issues including estate components, the omission to act, income tax reclaim and transfers of value.

 Shayala McRae, Chair of the SPP Legislation Committee, said: “Earlier this year the government accepted SPP’s key recommendation that administrators should not be liable for the reporting and payment of inheritance tax on pensions and that this responsibility should lie with Personal Representatives. However, publication of this draft legislation shows there are still some issues to iron out to ensure it better delivers the original policy intent and avoids unintended consequences – and the recommendations in our response will help achieve that.”

 The SPP consultation response is available here: