Section 567B Cases where inheritance tax is paid in respect of pension death benefitF1

there is an amount of taxable pension income (“amount TPI”) for a tax year for a pension, annuity or other item of pension income,

amount TPI reflects (to any extent) the payment to a person (“the beneficiary”) of a benefit under a pension scheme on the death of a member of the scheme (“the deceased”),

the benefit is not an excluded benefit, and

at any time (whether before or after the benefit is paid)—

in consequence of the payment, the scheme administrator makes an adjustment (under section 226B(5) of IHTA 1984) as a result of which the beneficiary’s entitlement to a benefit other than that mentioned in subsection (1) (“the other benefit”) is reduced, and

disregarding that reduction, the other benefit would not give rise to taxable pension income for any tax year.

the amount of inheritance tax paid as mentioned in subsection (1)(d)(i) or (ii), less so much (if any) of that inheritance tax as has been deducted under this subsection in an earlier tax year, and

so much of amount TPI as reflects the payment to the beneficiary of the benefit mentioned in subsection (1).

the amount of inheritance tax paid as mentioned in subsection (1)(d)(iii) so far as it meets the condition in subsection (2), less so much (if any) of that inheritance tax as has been deducted under this subsection in an earlier tax year, and

so much of amount TPI as reflects the payment to the beneficiary of the benefit mentioned in subsection (1).

the personal representatives pay a sum to the beneficiary out of the deceased’s estate that has been reduced by the amount of inheritance tax, or

the beneficiary reimburses the personal representatives that amount.