Inheritance Tax Act 1984 section 12

Dispositions allowable for income tax or conferring benefits under pension scheme

Section 12 excludes from inheritance tax certain dispositions that are deductible for income tax or corporation tax purposes, as well as employer contributions to pension schemes and the failure to exercise pension rights.

• A disposition is not a transfer of value if it is allowable as a deduction in computing the person's profits or gains for income tax or corporation tax, or would be allowable if those profits or gains were sufficient
• Employer contributions to a registered pension scheme, a qualifying non-UK pension scheme, or a section 615(3) scheme in respect of an employee are not transfers of value
• Where a member of one of these pension schemes fails to exercise pension rights (for example, by not drawing a pension or lump sum when eligible to do so), that omission is not treated as a transfer of value
• Where a disposition only partly meets the conditions for exemption, the part that qualifies and the part that does not are treated as two separate dispositions