RPSM03109046 - Technical Pages: Protecting pension rights from tax charges: Death benefits: Notification to HMRC

Primary and enhanced protection – notification to HMRC by the recipient of a lump sum death benefit

[Regs 3A, 4A, 10A, 13A & 14A The Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006 – SI 2006/131 – as amended by The Registered Pension Schemes (Enhanced Lifetime Allowance)(Amendment) Regulations 2006 – SI 2006/3261]

Notification must be made by the recipient of the lump sum death benefit, or by their personal representative.

Notification can be made only where the deceased member (or their personal representative) has validly notified their reliance on primary protection or enhanced protection (or both).

The notification by the recipient, or their personal representative, will not be valid unless it increases the primary protection factor or the amount of the ‘appropriate limit’ under enhanced protection.

Where the deceased member had primary protection it will be sufficient for one of the recipients of a lump sum death benefit to notify HMRC.

The notification must be made by the later of

• 31 January following 5 years after the end of the tax year in which the lump sum death benefit is paid. So if the lump sum death benefit was paid on 1 April 2007 the notification would need to be made by 31 January 2013, and
• where an assessment to tax under section 217(2) FA 2004 is made on a person who received a lump sum death benefit by 5 April in the tax year following the tax year in which the assessment is made. So if an assessment was made for the 2012/2013 tax year the notification would need to be made by 5 April 2014.

There is no specific HMRC form that has to be completed for the notification. The notification must be in writing, signed by the individual making the notification and dated. The notification must contain the following information.

• the name and address of the person making the notification;
• the name of the deceased protected member in respect of whose death the person making the notification has received the defined benefits lump sum death benefit or uncrystallised funds lump sum death benefit;
• the name of the registered pension scheme under which entitlement to payment of the defined benefits lump sum death benefit or uncrystallised funds lump sum death benefit arose;
• the name and address of the scheme administrator making the payment of the defined benefits lump sum death benefit or uncrystallised funds lump sum death benefit;
• the amount of the defined benefits lump sum death benefit or uncrystallised funds lump sum death benefit received by the person making the notification; and
• the date on which the defined benefits lump sum death benefit or uncrystallised funds lump sum death benefit was paid.

If the notification does not contain all this information it is not a valid notification.

HMRC will not issue a certificate. Unless there obvious errors or omissions in the notification, HMRC will confirm that the notification is valid. HMRC will advise recipients where tax is due as a lifetime allowance charge on the lump sums.

The person making a notification has the right to appeal against a refusal by HMRC to confirm the validity of the notification. The same rules as described in RPSM03100540 apply.