HM Revenue & Customs should create a Pensions Nil Rate Band to allow for “true IHT equality”, Neil MacGillivray has said.
The head of the technical support unit at James Hay Partnership said: “We propose the creation of a PNRB, as it would provide a fair balance between simplifying complex tax calculations and equalising the IHT treatment of all death benefits, regardless of the date that an individual started making pension contributions.”
Responding to HMRC’s consultation document, Inheritance Tax: A Fairer Way of Calculating Trust Charges, the platform called for property trusts holding death benefits from pension schemes created after 6 June 2014 to be exempt from the SNRB rules.
The 29-page HMRC document, published in June, proposed a new Settlement Nil Rate Band. The consultation closes for comments on 29 August.
The new PNRB would work in a similar way to the proposed SNRB and would be available for allocation between all death benefits held on relevant property trusts, regardless of the date of creation of the trust-based pension scheme.
Adviser View
Robin Melley, director of Shropshire-based Matrix Capital Limited, said: “One of the finance Acts looked at the introduction of
a 55 per cent recovery charge, which at that time was 82 per cent. At the time I argued that the IHT tax rate should be 40 per cent at death, which fell on deaf ears. I welcome this proposal, as it will encourage people to invest more into pensions.”
