The government has cracked down on a potential loophole in pension funds that
could have allowed wealthy individuals to avoid huge sums in inheritance tax.
Rules introduced to accommodate religious groups such as the Plymouth
Brethren, who did not want to receive an annuity, had created the possibility of
wealthy individuals keeping their pension pots as lump sums and not drawing an
That in turn could have meant pension pots passing through families on death,
avoiding a 40% inheritance tax charge. Gordon Brown announced that the loophole
will effectively be shut, by introducing a 70% charge on the pot if passed on.
Patrick Stevens, Ernst & Young tax partner, said the move was fair as the
government had not forced individuals to buy an annuity and could therefore
still retain control of their pension fund. ‘The government isn’t forcing you
into the arms of the insurance providers,’ he said.
Pension fund holders over 75 years old will have to draw 65% from their fund
based on what would normally be drawn from an annuity, but Stevens said this
move was ‘a modest proposal’.
The changes will be effective from 6 April 2007.
"The whole idea of HMRC officials supplying confidential information about individuals to the media on a non-attributable basis is, or should be, a matter of serious concern," say Supreme Court judges
Crowe Clark Whitehill , the top 20 accountancy firm, has announced the promotion of Chris Mould to partner
HMRC has won its tenth successive case against tax avoidance schemes promoted by NT Advisors. The Court of Appeal has ruled that NT ... read more
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year