HMRC have published a new downloadable document containing technical guidance on the new interim Pensions and Inheritance Tax rules which were announced in the Budget on June 22 and published in the Finance (No. 2) Bill 2010. The document explains how the new rules will apply to members of registered pension schemes who reach age 75 on or after 22 June 2010.

The Budget announcement stated an end from April 2011 to the existing rules that create an effective obligation to purchase an annuity by age 75 to enable individuals to make more flexible use of their pension savings.

As an interim measure, provision is made in Finance Bill 2010 so that the tax rules will not make members of registered pension schemes who reach the age of 75 on or after 22 June 2010 buy an annuity or otherwise secure a pension income until they reach the age of 77. These transitional tax rules will apply from 22 June 2010.

This will enable all such members to defer their decision on what to with their pension savings until the new rules are finalised next year.

The document just published provides technical guidance on how the new interim pensions tax rules will apply. The Technical Note also gives guidance on the related changes to treatment for IHT purposes. It should be noted by readers that the guidance should be considered as draft as it is based on what is currently draft legislation and hence the guidance may need to be amended to reflect future changes.

For the technical guidance go to http://www.hmrc.gov.uk/pensionschemes/technical–note.pdf