Q&As

Will payments be treated as 'same-day additions' under IHTA 1984, s 62A, for the purpose of calculating ongoing IHT charges on pilot trusts, where an employee is a member of a contractual contributory pension scheme and that employee has requested that the administrators divide funds to several pilot trusts set up by that employee on different days during his lifetime so that the total funds in each pilot trust remains under the IHT nil rate band?

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Published on LexisPSL on 01/02/2016

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • Will payments be treated as 'same-day additions' under IHTA 1984, s 62A, for the purpose of calculating ongoing IHT charges on pilot trusts, where an employee is a member of a contractual contributory pension scheme and that employee has requested that the administrators divide funds to several pilot trusts set up by that employee on different days during his lifetime so that the total funds in each pilot trust remains under the IHT nil rate band?

The relevant parts of section 62A of the Inheritance Tax Act 1984 (IHTA 1984) provide:

Section 62A Same-day additions

'(1) For the purposes of this Chapter, there is a "same-day addition", in relation to a settlement ("settlement A"), if—

  1. there is a transfer of value by a person as a result of which the value immediately afterwards of the property comprised in settlement A is greater than the value immediately before,

  2. as a result of the same transfer of value, or as a result of another transfer of value made by that person on the same day, the value immediately afterwards of the property comprised in another settlement ("settlement B") is greater than the value immediately before,

  3. that person is the settlor of settlement A and settlement B,'

In essence, whether the payments to the various pilot trusts constitute ‘same-day additions’ for the purposes of IHTA 1984, s 62A depends on whether the pension member makes one or more transfers of value on the same day which, taken together, increase the value of the property in settlements A and B.

On the facts, it will be the pension administrators who will make the payments: it is assumed that the administrators cannot be regarded as settlors of the pilot trusts. Therefore, it would appear that, as the payments are not made by the person who has settled the trusts,

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