Section 637I — Income Tax (Earnings and Pensions) Act 2003: Pension protection lump sum death benefits

Pension protection lump sum death benefits 637I 1 Subject to subsections (2), (3) and (4) no liability to income tax arises on a pension protection lump sum death benefit paid under a registered pension scheme.

2 If—

a a pension protection lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, and b the lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

3 If a pension protection lump sum death benefit under a registered pension scheme is paid—

a in respect of a member who, on death, is 75 or over, and b to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

4 If a pension protection lump sum death benefit under a registered pension scheme is paid—

a in respect of a member who, on death, is 75 or over, and b to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

5 In this section— “ non-qualifying person ” has the same meaning as in section 206 of FA 2004; “ the permitted maximum ”, in relation to a pension protection lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available on the lump sum being paid (see section 637S); “ qualifying person ” means a person who is not a non-qualifying person.