The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
To encourage people to make provision for retirement, pension schemes benefit from specific tax reliefs. The predominant reliefs relate to income tax, but there are also targeted inheritance tax provisions which form part of the pensions landscape. This guidance note describes the inheritance tax rules and reliefs which affect pension schemes at each stage of the pension lifecycle.
The current income tax regime for pensions follows an ‘Exempt-Exempt-Taxed’ structure:
Each stage in this lifecycle could potentially have inheritance tax consequences. Contributions may involve a transfer of value. Pension investments are held within a trust or comparable vehicle. The residual fund on death could be regarded as part of the deceased’s estate available for distribution to his beneficiaries. Specific rules are required to bestow inheritance exemption to match or complement the income tax position. Note, however, that in certain circumstances pension contributions and investments are chargeable to inheritance tax.
For more information about the income tax rules during the member’s lifetime, see the Pension Planning sub-topic in the Personal Tax module, and in particular the following guidance notes (all subscription sensitive):
Income tax rules relating to death benefits are dealt with in this module
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