The Taxation of Pension Schemes (Transitional Provisions) Order 2006

Lump sum death benefits— death of member

40.—(1) This paragraph applies to a lump sum paid—

(a) in respect of the death, occurring before the 6th April 2006, of a member of a pension scheme;

(b) within two years of the member’s death;

(c) by a scheme which is treated as becoming a registered pension scheme on the 6th April 2006 by virtue of paragraph 1(1) of Schedule 36;

(d) in accordance with the rules of that scheme as they stood—

(i) immediately before the death; or

(ii) immediately before the 6th April 2006; and

(e) in circumstances which would not have given the Commissioners grounds for withdrawing the approval of the scheme.

(2) A lump sum to which paragraph (1) applies is not a relevant lump sum death benefit as defined in paragraph 16 of Schedule 32, and the payment of such a death benefit is to be disregarded for the purposes of benefit crystallisation event 7.

(3) A lump sum to which paragraph (1) applies shall be chargeable to income tax in accordance with section 648B of ICTA(1) as if—

(a) that section had not been repealed;

(b) references in that section to the administrator of the scheme were references to the scheme administrator of the registered pension scheme which is treated as coming into being by virtue of paragraph 1(1)(g) of Schedule 36;

(c) subsection (3) were omitted; and

(d) the reference in subsection (4) to the rules of the scheme were a reference to the rules of the personal pension scheme as they stood immediately before the 6th April 2006.

(4) For the purposes of a lump sum payment to which paragraph (1) applies, regulation 5 of the Personal Pension Schemes (Information Powers) Regulations 2000(2) (“the 2000 Regulations”) shall continue to have effect, subject to the following modifications—

(a) references to the scheme administrator of the personal pension scheme are to be read as references to the scheme administrator of the registered pension scheme which is treated as coming into being by virtue of paragraph 1(1)(g) of Schedule 36; and

(b) in paragraph (2) of that regulation for “an approved personal pension scheme” substitute “the registered pension scheme”.

(5) In section 98(5) of the Taxes Management Act 1970 the entry in Table 1 relating to regulations under section 651A(1)(b) to (d) of ICTA shall continue to have effect, so far as it relates to regulation 5 of the 2000 Regulations as saved, with modifications, by paragraph (4).

(1)

Section 648B was inserted by paragraph 12 of Schedule 11 to the Finance Act 1995, amended by paragraph 266 of Schedule 1 to the Income Tax (Trading and Other Income Act 2005, and repealed by Part 3 of Schedule 42 to the Finance Act 2004.

(2)

S.I. 2000/2316.