Finance Act 2004

Inheritance tax

58 (1) Section 151 of the Inheritance Tax Act 1984 (treatment of pension rights) continues to apply to so much of the assets of the fund or scheme at any time as does not exceed the amount that is the protected amount at that time.

(2) But sub-paragraph (1) does not affect the operation of subsection (1)(d) of section 58 of that Act (because paragraph 57 makes provision about the extent to which the assets of the fund or scheme constitute relevant property within the meaning given by that section).

(3) If inheritance tax has not previously been chargeable (otherwise than only because of this paragraph) by reference to the value of the assets of the fund or scheme on or after 6th April 2006, the protected amount is an amount equal to the amount of the market value of the assets of the fund or scheme on 5th April 2006, but subject to the adjustments provided by sub-paragraph (4).

(4) The adjustments are—

(a) an increase by the percentage by which the retail prices index for the month of September immediately preceding the time in question is greater than that for April 2006, and

(b) a reduction by the amount of any relevant payments made under the fund or scheme on or after 6th April 2006 and before that time.

(5) If inheritance tax would (apart from this paragraph) have previously been chargeable by reference to the value of the assets of the fund or scheme on one or more occasions on or after 6th April 2006, the protected amount is what it was immediately before the occasion, or (where there has been more than one) the last occasion, on which inheritance tax would have been so chargeable (“the relevant tax occasion”), but—

(a) reduced by the value of the property on which inheritance tax would have been chargeable on the relevant tax occasion, and

(b) subject to the adjustments provided by sub-paragraph (6).

(6) The adjustments are —

(a) an increase by the percentage by which the retail prices index for the month of September immediately preceding the time in question is greater than that for the month in which the relevant tax occasion fell, and

(b) a reduction by the amount of any payments made under the fund or scheme since the relevant tax occasion.

(7) “Relevant payments” are payments other than—

(a) payments of costs or expenses, or

(b) payments which are (or will be) income of any person for any of the purposes of income tax.