Finance Act 2004 (c. 12)

SCHEDULES

SCHEDULE 36 U.K. Pension schemes etc: transitional provisions and savings

Modifications etc. (not altering text)

C1 Sch. 36 modified by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), art. 23D (as inserted (1.6.2009) by S.I. 2009/1172, arts. 1, 3)

C2 Sch. 36 applied (1.6.2018) by The Local Government Pension Scheme (Scotland) Regulations 2018 (S.S.I. 2018/141), regs. 1(1), 48(2)

Part 4 U.K. Other provisions

Inheritance tax U.K.

56 (1) This paragraph applies in relation to a fund or scheme— U.K.

(a) which is not a registered pension scheme [F1 , a qualifying non-UK pension scheme] or a superannuation fund to which section 615(3) of ICTA applies, but

(b) to which section 151 of the Inheritance Tax Act 1984 (c. 51) (treatment of pension rights) applied immediately before 6th April 2006.

(2) If no contributions are made under the fund or scheme on or after that date—

(a) section 151 of the Inheritance Tax Act 1984 continues to apply to the fund or scheme on and after that date for all purposes of that Act, and

(b) property which is part of or held for the purposes of the fund or scheme does not constitute relevant property for the purposes of Chapter 3 of Part 3 of that Act (settlements without interest in possession).

(3) In any other case, paragraphs 57 and 58 apply to the fund or scheme on and after that date.

[F2 (4) In this paragraph “qualifying non-UK pension scheme” has the same meaning as in the Inheritance Tax Act 1984 (see section 271A of that Act).]

Textual Amendments

F1 Words in Sch. 36 para. 56(1)(a) inserted (retrospective to 6.4.2006) by Finance Act 2008 (c. 9), Sch. 29 para. 18(7)(a)(8)

F2 Sch. 36 para. 56(4) inserted (retrospective to 6.4.2006) by Finance Act 2008 (c. 9), Sch. 29 para. 18(7)(b)(8)

57 (1) The [F3 percentage] of the assets of the fund or scheme which at any time is the protected [F3 percentage] of those assets does not at that time constitute relevant property for the purposes of Chapter 3 of Part 3 of the Inheritance Tax Act 1984 (settlements without interest in possession). U.K.

(2) “The protected [F4 percentage]” of the assets of the fund or scheme at a time is—

where—

V is the market value of the assets of the fund or scheme at that time, and

ACV is the adjusted commencement value, that is an amount equal to the market value of the assets of the fund or scheme on 5th April 2006, but subject to the adjustments provided by sub-paragraph (3).

(3) 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.

(4) “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.

Textual Amendments

F3 Word in Sch. 36 para. 57(1) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 58(2), 64(1)

F4 Word in Sch. 36 para. 57(2) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 58(2), 64(1)

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. U.K.

(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 [F5 relevant] 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.

Textual Amendments

F5 Word in Sch. 36 para. 58(6)(b) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 58(3), 64(1)