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IHT kills off Furbs

The Inland Revenue’s confirmation that inheritance tax will be applied to pensions is the final nail in the coffin for Furbs, according to pension experts.

Several advisers say they know of IFAs selling Furbs as IHT-avoidance vehicles but paymaster general Dawn Primarolo’s statement that the Revenue is to consult on how it will apply IHT to pensions mean this loophole app-ears closed.

Furbs were sold as they enabled individuals to invest in their pension above approved scheme limits. The whole amount invested could be taken as a tax-free lump sum. After A-Day, the former is no longer an issue and the latter looks set to be curtailed.

Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “Furbs are effectively dead from April 6 next year and I am closing down all my clients’ Furbs.”

Central Financial Planning director Ian Smith says: “If Furbs no longer have IHT protection, they have not got a lot to offer.”

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