GIFT OF PENSION FUND TO CHILDREN

[pdfx4]

Can anyone help with the answer to the following please ? I am 80 years of age. I realise that until April 2027 my pension fund (in income drawdown now) could pass as a separate estate to my 2 children and would not be subject to Inheritance tax. However I am considering gifting my pension fund to my 2 children now and hope that I would survive another 7 years.
If I gift my pension fund to my children now will it continue as a pension fund in their names and escape future capital gains tax etc ?
I assume that the disposal of my fund to my children would not attract CGT as a "disposal" ?
Presumably my children would only be able to draw an income from the fund after they attain 55 years of age (they are both at present in their late 40s) .
Or would my fund just become a normal investment fund in their hands and therefore subject to CGT and any income tax on withdrawals ?
Many thanks for any help. Much appreciated.

[strawn]

I suspect there is no legal route that allows you to gift the fund but I join you in waiting for someone with expertise to come along.

[AGoodman]

The tax rules are horribly complicated (at least to me) but essentially the pension scheme rules will only allow payments to you so there is no mechanism allowing you to "gift" it. You could draw down the rest of the pension but that will be subject to income tax in your hands.

If you draw down more income than you need to cover your living expenses, and make annual gifts of the excess to your children, those gifts should be exempt from inheritance tax. That would still incur income tax when you drawdown but avoid the double tax your children would have to pay of inheritance tax plus income tax. Do take professional advice before considering this and make sure you have ample funds left in case you live to 105.

[pdfx4]

thanks very much for the replies. I feared that it was a bit complicated !

[sharpener]

Am 78 y/o in a similar situation to the OP above so have continued this thread, apols if not right.

I am looking at annuities as a workaround with a view to the following:

• Buy an annuity with (say) £250k of ~£1M pension pot (already in drawdown, have taken max lump sum but am not drawing income ATM).

• This should put the £250k out of reach of IHT on pension pots

• Annuity would be guaranteed for 17 yrs so lasts until grandson b 2025 is 18 with him nominated as beneficiary

• Income is taxable in my hands (at higher rate)

• Pay income to grandson as lifetime gifts out of income to grandson, not taxable in his hands as they are gifts

• He will continue to receive payments after my death

Will this work?

What is his tax position after my death?