Part 4U.K.Pension schemes etc

Modifications etc. (not altering text)

C7Pt. 4 modified (1.7.2008) (N.I.) (with effect in accordance with reg. 1 of the amending Rule) by The Health and Social Care (Pension Scheme) Regulations (Northern Ireland) 2008 (S.R. 2008/256), regs. 1, 124(1) (with regs. 134, 258)

C9Pt. 4 applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 35 para. 18

C10Pt. 4 modified (19.7.2011) by Finance Act 2011 (c. 11), Sch. 18 para. 14(3)

C11Pt. 4 applied (with modifications) (with application in accordance with Sch. 22 para. 1 of the amending Act) by Finance Act 2013 (c. 29), Sch. 22 para. 1(2)

C12Pt. 4 modified (17.7.2014) by Finance Act 2014 (c. 26), Sch. 6 para. 1(2)(3)

C13Pt. 4: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)

Chapter 5U.K.Registered pension schemes: tax charges

Charges on authorised paymentsU.K.

206Special lump sum death benefits chargeU.K.

(1)A charge to income tax, to be known as the special lump sum death benefits charge, arises where—

(a)a pension protection lump sum death benefit,

(b)an annuity protection lump sum death benefit, F1...

[F2(c)a drawdown pension fund lump sum death benefit,] [F3or

(d)a flexi-access drawdown fund lump sum death benefit,]

is paid by a registered pension scheme [F4in respect of a member who had reached the age of 75 at the date of the member's death].

[F5(1ZA)In subsection (1) the reference to a member (and to the member's death) are to be read—

(a)in relation to—

(i)a drawdown pension fund lump sum death benefit under paragraph 17(2) of Schedule 29, or

(ii)a flexi-access drawdown fund lump sum death benefit under paragraph 17A(2) of Schedule 29,

as a reference to a dependant (and to the dependant's death),

(b)in relation to a flexi-access drawdown fund lump sum death benefit under paragraph 17A(3) of Schedule 29, as a reference to a nominee (and to the nominee's death), and

(c)in relation to a flexi-access drawdown fund lump sum death benefit under paragraph 17A(4) of Schedule 29, as a reference to a successor (and to the successor's death).]

[F6(1A)The special lump sum death benefits charge also arises where—

(a)a defined benefits lump sum death benefit, or

(b)an uncrystallised funds lump sum death benefit,

is paid by a registered pension scheme in respect of a member who had reached the age of 75 at the date of the member's death.]

[F7(1B)The special lump sum death benefits charge also arises where—

(a)a lump sum death benefit is paid by a registered pension scheme in respect of a member of the scheme who had not reached the age of 75 at the date of the member's death,

(b)the lump sum death benefit is—

(i)a drawdown pension fund lump sum death benefit under paragraph 17(1) of Schedule 29,

(ii)a flexi-access drawdown fund lump sum death benefit under paragraph 17A(1) of Schedule 29, or

(iii)an uncrystallised funds lump sum death benefit, and

(c)the lump sum death benefit is not paid before the end of the period of two years beginning with the earlier of the day on which the scheme administrator of the scheme first knew of the member's death and the day on which the scheme administrator could first reasonably have been expected to have known of it.

(1C)The special lump sum death benefits charge also arises where—

(a)a lump sum death benefit is paid by a registered pension scheme on the death of a dependant, nominee or successor of a deceased member of the scheme,

(b)the dependant, nominee or successor (“the beneficiary”) had not reached the age of 75 at the date of the beneficiary's death,

(c)the lump sum death benefit is—

(i)a drawdown pension fund lump sum death benefit under paragraph 17(2) of Schedule 29, or

(ii)a flexi-access drawdown fund lump sum death benefit under paragraph 17A(2), (3) or (4) of Schedule 29, and

(d)the lump sum death benefit is not paid before the end of the period of two years beginning with the earlier of the day on which the scheme administrator of the scheme first knew of the beneficiary's death and the day on which the scheme administrator could first reasonably have been expected to have known of it.]

(2)The person liable to the special lump sum death benefits charge is the scheme administrator.

(3)The scheme administrator is liable to the special lump sum death benefits charge whether or not—

(a)the scheme administrator, and

(b)the person to whom the lump sum death benefit is paid,

are residentF8... or domiciled in the United Kingdom.

(4)The rate of the charge is [F945%] in respect of the lump sum death benefit.

(5)The Treasury may by order increase or decrease the rate for the time being specified in subsection (4).

(6)Tax under this section is to be charged on the amount of the lump sum paid or, if the rules of the pension scheme permit the scheme administrator to deduct the tax before payment, on the amount of the lump sum before deduction of tax.

[F10(7)A lump sum death benefit in respect of which income tax is charged under this section is not to be treated as income for any purpose of the Tax Acts.]

Textual Amendments

F1Word in s. 206(1)(b) omitted (17.12.2014) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 13(a)

F2S. 206(1)(c) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 41(2)

F3S. 206(1)(d) and preceding word inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 13(b)

F4Words in s. 206(1) inserted (17.12.2014) (with application in accordance with s. 2(5) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), s. 2(2)

F5S. 206(1ZA) inserted (17.12.2014) (with application in accordance with Sch. 2 para. 20 of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 17(2)

F6S. 206(1A) inserted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 41(3)

F7S. 206(1B)(1C) inserted (17.12.2014) (with application in accordance with Sch. 2 para. 20 of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 17(3)

F8Words in s. 206(3) omitted (with effect in accordance with Sch. 46 para. 132 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 46 para. 123

F9Word in s. 206(4) substituted (17.12.2014) (with application in accordance with s. 2(5) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), s. 2(3)

F10S. 206(7) substituted (17.12.2014) (with application in accordance with Sch. 2 para. 20 of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 17(4)

Modifications etc. (not altering text)

C15S. 206 applied by S.R. 1995/95, reg. 89A(10) (as inserted (N.I.) (with effect in accordance with reg. 1(2) of the amending Rule) by The Health and Personal Social Services (Superannuation Scheme, Injury Benefits and Additional Voluntary Contributions) (Amendment) Regulations (Northern Ireland) 2006 (S.R. 2006/410), regs. 1(2), 16)

Commencement Information

I1Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284