As well as the increased flexibility in terms of drawdown arrangements that were introduced in April 2015 there were some important changes to what happens to the undrawn funds on death. These changes mean that your pension fund can be passed to survivors tax efficiently.
A loan trust can be used as a vehicle to save inheritance tax, whilst retaining the ability to access the funds lent to the trust.
The residence nil rate band (RNRB) is an additional nil rate band, which is available where a death occurs on or after 6 April 2017 (or, in the case of married couples and civil partners, the death of the second spouse/civil partner occurs after that date) and the property is left to direct descendants.
When someone dies, there are forms to fill in and send to HMRC. There are different forms and the correct forms depend on whether or not there is any inheritance tax to pay.
From April 2017, a new nil rate band – the residence nil rate band (RNRB) – is available for inheritance tax purposes. It increases the amount that can be left free of inheritance tax when the estate includes a residence (or a share in a residence) that is left to a direct descendant.
While giving away assets and hoping to live for seven years afterwards can take them out of the taxman’s reach for inheritance tax purposes, the downside is that you lose the right to benefit from those assets.