LTA Changes & Inheritance Tax
JBar
Member
From a discussion with a colleague this morning, we were pondering the effect of the following:
Deathbed payment into a pension (above whatever relevant annual allowance was applicable). Is this a potentially significant way to mitigate Inheritance tax upon death? Naturally, the basic rate relief applied going in would then need to be repaid as an annual allowance tax charge on most of a large payment, but would this then be immediately outside the estate for any IHT calculation? No LTA problem as from 6th of April this wouldn't be taxable upon death as I understand it.
Anybody have any thoughts?
Deathbed payment into a pension (above whatever relevant annual allowance was applicable). Is this a potentially significant way to mitigate Inheritance tax upon death? Naturally, the basic rate relief applied going in would then need to be repaid as an annual allowance tax charge on most of a large payment, but would this then be immediately outside the estate for any IHT calculation? No LTA problem as from 6th of April this wouldn't be taxable upon death as I understand it.
Anybody have any thoughts?
Comments
Would that not get caught by the same two year rule that applies to transfers?
Abrdn's tech page suggests that it does.
https://techzone.abrdn.com/public/pensions/Tech-guide-pensions-IHT#anchor_6
Yep, i'd say a payment in ill-health would definitely be added back into the estate value.
As has been highlighted, this does not work.
Reportable on IHT 409 by executors.
IHT Manual gives guidance and HMRC look out for contributions which are not of a normal pattern, or are unusual in size made when member knows they are in ill health and will then get treated as transfers of value.