Regulation 5 Payment of pension benefits: further defined benefits lump sum death benefit

(1)

(a)

a defined benefits lump sum death benefit^f1 (“the original payment”) was paid under a relevant pension scheme in respect of the death of a member,

(b)

the original payment was made before the end of the relevant two-year period,

(c)

as a result of a rectification exercise, the amount of the defined benefits lump sum death benefit payable under the scheme in respect of the death increases,

(d)

a payment (“the later payment”) is made in respect of the increase, and

(e)

the later payment is not made before the end of the relevant two-year period.

(2)

The later payment is to be treated for the purposes of the following provisions as having been made before the end of the relevant two-year period—

(a)

section 637H(2), (3) and (4) of ITEPA 2003 (circumstances in which payment of defined benefits lump sum death benefit is subject to income tax)^f2;

(b)

section 206(1B) of FA 2004 (circumstances in which payment of defined benefits lump sum death benefit is subject to the special lump sum death benefits charge)^f3.

(3)

In this regulation, “the relevant two-year period” means the period of two years beginning with the earlier of the day on which the scheme administrator^f4 of the scheme first knew of the member's death and the day on which that scheme administrator could first reasonably have been expected to have known of it.

Annotations

Footnotes

f1: “Defined benefits lump sum death benefit” is defined in paragraph 13 of Schedule 29 to the Finance Act 2004.
f2: Section 637H was inserted by paragraph 41 of Schedule 9 to FA 2024.
f3: Section 206(1B) was inserted by paragraph 17(3) of Schedule 2 to the Taxation of Pensions Act 2014 and amended by section 21(2) and (3) of the Finance (No. 2) Act 2015.
f4: “Scheme administrator” is defined in section 270 of the Finance Act 2004.