RPSM10105140 - Technical Pages: Death benefits: Lump sums pre 6 April 2011: Member dies aged under 75: Taxation of a defined benefits lump sum death benefit
This guidance only covers the position where the member died before 6 April 2011. If the member died on or after 6 April 2011 see RPSM10106000.
Taxation of a defined benefits lump sum death benefit
| [Para 11, Sch 31][s636A(1)(e), Chapter 15A ITEPA03] |
Payment of a defined benefits lump sum death benefit is a benefit crystallisation event that triggers a test against the member’s available lifetime allowance - see RPSM11104810.
Where the payment is less than the member’s available lifetime allowance the defined benefits lump sum death benefit can be paid tax free.
Where the payment is more than the member’s available lifetime allowance the amount of the defined benefits lump sum death benefit that is over the member’s available lifetime allowance will be a chargeable amount. A chargeable amount will give rise to a lifetime allowance charge at the rate of 55%. This charge falls on the recipient of the payment (see RPSM11105510).
| Glossary (RPSM20000000) |
