SolvedIHTM17015 | Pensions: examining form IHT409: boxes 17 to 24
From HM Revenue & Customs · Inheritance Tax Manual
Most death benefits are not chargeable to Inheritance Tax. This can provide an opportunity for people in ill-health to use pension schemes to pass value to chargeable beneficiaries without a tax charge. There is a risk even if the estate is spouse or civil partner exempt, as it involves lifetime transfers of value. Other indications of tax planning such as a recent Will, power of attorney, gifts or evidence of ill-health in the 2 years before death may alert you to this possibility.
Where there is evidence of any transfers, disposals, other changes or additional contributions made to a pension, you should make the following enquiries:
Transfers
Obtain details of;
the old and the new scheme (provider and contract/policy number),
the value of the funds transferred, and
an indication of the deceased’s state of health at the time.
Disposals
This will mainly involve death benefits being written into trust. You should obtain:
the value of the funds,
details of any benefits being taken at the time, and
an indication of the deceased’s state of health at the time.
Changes
This includes any other change in the benefits being taken in the 2 years before death. You should obtain:
details of the scheme, details of the benefits being taken, and
an indication of the deceased’s state of health at the time.
Sometimes changes will be reported that are not of interest to us, for example a normal retirement. You will need to use your judgement to identify the potential lifetime transfers.
Contributions
If the contributions are substantial and unusual (they are not made under regular arrangements that have been in existence for more than 2 years), obtain:
details of the scheme,
the dates and amounts of contributions into the scheme, and
an indication of the deceased’s state of health at the time.
You may need to look at the member’s and employers’ contributions over a longer period (say 5 years), to establish the pattern and identify any potential lifetime transfers in the 2 years before death.
Arguments about lifetime transfers are difficult and, in all cases, you will need advice from Technical and the Actuarial Team once all the details are known.
Deceased’s state of health
The caseworker should make a referral to the Actuarial Team who will provide you with the necessary wording and details to ask for medical evidence.
If we need to see any medical evidence or records we will ask the taxpayer or agent to send this directly to the Actuarial Team.