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Advice for Solicitors: CAT on transfer of pension funds/ARFs

Pension funds and Approved Retirement Funds (ARFs) are also assets for Capital Acquisition tax purposes. The transfer of these assets must also be considered when planning for inheritance tax.

The table below highlights the tax implications on pension pay out after that pension has been accessed on Death.

Relationship to ARF Holder Income Tax Assessable for Inheritance Tax
To an ARF owned by spouse or civil partner of the deceased ARF holder No No
To a child of the deceased ARF holder or to a child of the civil partner of the deceased ARF holder - child aged under 21 at date of death No Yes
To a child of the deceased ARF holder or to a child of the civil partner of the deceased ARF holder - child aged over 21 at date of death 30% Income Tax Rate No

 

Careful planning can insure that any tax leakage on the transfer of pension asset is kept to a minimum.

Should you wish to discuss this or your pension funds further, please do not hesitate to contact us.