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Legislation
Income Tax (Earnings and Pensions) Act 2003

Crossheading Tax treatment of authorised lump sum death benefits

  • Section 637H Defined benefits lump sum death benefits
  • Section 637I Pension protection lump sum death benefits
  • Section 637J Uncrystallised funds lump sum death benefits
  • Section 637K Annuity protection lump sum death benefits
  • Section 637L Drawdown pension fund lump sum death benefits
  • Section 637M Flexi-access drawdown lump sum death benefits
  • Section 637N Trivial commutation lump sum death benefits
  1. Tax treatment of authorised lump sum death benefits
  2. Annuity protection lump sum death benefits

Section 637K | Annuity protection lump sum death benefits F1

From legislation.gov.uk

(1)Subject to subsections (2), (3) and (4), no liability to income tax arises on an annuity protection lump sum death benefit paid under a registered pension scheme.F1

(2)If—F1

(a)an annuity protection lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, andF1

(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 an annuity 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, andF1

(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 an annuity 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, andF1

(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 an annuity 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.

Notes

  1. F1

    Pt. 9 Ch. 15A substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 41, 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4; and (18.11.2024 for the tax year 2024-25 and subsequent tax years) by S.I. 2024/1012, regs. 1(2)(3), 17)

  2. F2

    Words in s. 637K(5) substituted (for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 3(3)

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