The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
When a member of a pension scheme dies, he may be in receipt of pension income, or he may have future rights to a pension which have not yet crystallised. In either situation some rights may be transferred to beneficiaries or the personal representatives.
The Administration of pension rights on death guidance note describes the death benefits or payments that arise from different types of pension, and how to deal with them in the course of administering the estate. This guidance note covers the income tax treatment of death benefits and payments. Where applicable, the compliance procedure is explained. The Inheritance tax treatment of pensions on death guidance note provides the corresponding explanation for inheritance tax.
The structure of legislation relating to the taxation of pensions is complex. The core legislation for the taxation of registered pension schemes is found in FA 2004, Part 4. Almost every Finance Act since 2004 has made some amendment to that core legislation. Where the pensions legislation requires income tax to be charged on an individual, it refers to provisions in ITEPA 2003, Part 9. The most recent changes were introduced by:
Major changes to the taxation of death benefits were introduced in the above statutes by amending the relevant provisions in FA 2004 and ITEPA 2003.
This guidance note describes the rules that apply with effect from 6 April 2015. For information on previous arrangements, see Simon’s Taxes, E7.239 and I5.635 (subscription sensitive).
The income tax treatment of post death pension rights is determined by:
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