Citywire has commented on the Court of Appeal decision of HMRC v Parry & Ors where the appellant argued that a lifetime pension scheme transfer was not a transfer of value for Inheritance Tax purposes. HMRC won on the contention that it was.

The Court of Appeal also agreed with HMRC's assertion that the failure by the pension saver to take lifetime income benefits at a time when she was in ill health, specifically the late stages of a terminal illness, was a further 'disposition' under the Inheritance Tax Act and therefore a separate Inheritance Tax charge arose.

Pensions are a very useful tool in the estate planning arsenal, however this case demonstrates the care that must be taken when reviewing existing provision and before any changes are made. Further, timely planning is key as ill-health may eliminate the possibility of a tax-efficient transfer into another scheme.