PSI11.2.24 - Benefits on Death in Service: Lump Sum Benefits Discretionary Distribution

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

The payment of a lump sum death in service benefit is, most usually distributed at the discretion of the scheme's employer or administrator, (see PSI11.2.22). However, where scheme rules provide for payment of the lump sum to the legal personal representative or a nominated beneficiary, the lump sum forms part of the deceased employee's estate and is chargeable to Inheritance Tax (IHT) unless it is paid to the widow(er). IHT is the responsibility of the Capital Taxes Office (CTO - see Introduction 1.12). Anyone making enquiries about the consequences of IHT on a payment from a pension scheme should be referred to the CTO.

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