Section 637I | Pension protection lump sum death benefits ^F1

(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.^F1

(2)If—^F1

(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^F1

(b)the lump sum exceeds the permitted maximum,^F1

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—^F1

(a)in respect of a member who, on death, is 75 or over, and^F1

(b)to a qualifying person,^F1

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—^F1

(a)in respect of a member who, on death, is 75 or over, and^F1

(b)to a non-qualifying person,^F1

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—^F1F2

“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.