Please note that, subject to consultation, the lump sum might change to be being taxed as beneficiaries' income from 2016/17 rather than an automatic charge of 45% applying.
Funds paid in flexi-access drawdown - taxed as income on the beneficiary under PAYE.Lump sums - 45% tax charge (SLSDBC), or.On the other hand, if you are 75 or over when you die, the tax on lump sum benefits is as follows: After two years - taxed as income of the beneficiary under PAYE.Within two years - no tax charge on the draw down/ annuity.After two years - 45 % special lump sum death benefit charge (SLSDBC)Īlternatively, any death benefits within the LTA (see later) can be paid through flexi-access drawdown and the tax treatment of this again depends on whether the funds are designated into a flexi-access drawdown within two years of your death or later.If you die aged under 75 years, it will then depend on whether or not the administrator pays any lump sum benefits out within or after two years of your death. The changes will depend on whether the pension scheme member (you) dies before or after reaching the age of 75, regardless of whether or not you have already accessed your pension fund. Accessing pensions became more flexible from 6 April 2015, as well as changes being made to pension death benefits.
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