TaxAdministrationChancellor uses PBR to close religious pensions loophole

Chancellor uses PBR to close religious pensions loophole

Ministers step in to close inheritance tax pensions loophole

Pre Budget report

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
income.

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.

Related Articles

LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

3d Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2w Emma Smith, Managing Editor
HMRC issues updated Trusts Registration Service guidance

Administration HMRC issues updated Trusts Registration Service guidance

3w Emma Smith, Managing Editor
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3m Austin Clark, Reporter
Are you ready for the Trusts Registration Service?

Administration Are you ready for the Trusts Registration Service?

3m Helen Thornley, ATT Technical Officer
Advisers bullish despite Brexit concerns

Accounting Standards Advisers bullish despite Brexit concerns

1y Fraser Simpson, Reporter
Brexit: Five questions accountants should be asking

Accounting Firms Brexit: Five questions accountants should be asking

1y Fraser Simpson, Reporter