A transfer of funds to a personal pension plan is a transfer of value for inheritance tax purposes, the Court of Appeal has held. In HMRC v Parry [2018] EWCA Civ 2266, Mrs Staveley (deceased) had received a share of her ex-husband’s company pension fund after an acrimonious divorce.
She transferred the fund into what was then known as a ‘section 32 buyout’, which gave the advantage of a purchase exemption. Six years later, in 2006, Mrs Staveley transferred her fund into a personal pension plan. She died less than two months later.
If the pension had remained in the section 32 policy then a lump sum would have been payable to her estate and inheritance tax levied. Under the personal pension plan, Mrs Staveley’s two sons would receive the benefit direct on her death and, if the purchase exemption applied, there would be no inheritance tax to pay.
Allowing HMRC’s appeal, however, the court held that Mrs Staveley had intended to confer a gratuitous benefit on her sons.
