Inheritance Tax Act 1984 section 152

Cash options

Section 152 ensures that where a deceased person had the option under a pension scheme to take a lump sum instead of an annuity payable to their survivors, that lump sum is not treated as part of their estate for inheritance tax purposes.

• Applies to registered pension schemes, qualifying non-UK pension schemes, and section 615(3) schemes (occupational pension schemes for non-resident members of employers operating partly or wholly outside the UK)
• Where an annuity becomes payable on death to a surviving spouse, civil partner, dependant, or nominee, and the deceased could have opted for a lump sum to be paid to their personal representatives instead, that lump sum is excluded from the deceased's estate
• The effect is that no inheritance tax charge arises on the lump sum that the deceased had the option to receive, because the deceased is not treated as having been beneficially entitled to it
• This exclusion only applies where the lump sum option would have been payable to the deceased's personal representatives — if the option was for payment to other persons, the relief does not apply