Death Benefits and the Lifetime Allowance (LTA) - Section 07B

Do death benefit lump sums count as part of the Lifetime Allowance?

In most cases, yes. As well as any pension the member may have already been paid, the lump sum payments made from their pension as a result of their death also count as using part of their LTA.

A lump sum may be paid when an active member, a member with a preserved pension or a pensioner dies.

HM Revenue & Customs set the rules around the LTA.

Do pensions for dependants count towards the Lifetime Allowance?

No. Pensions that are paid to dependants following the death of a member do not count towards the LTA of either the deceased member or the person getting the pension.

Who has to check to see if the member has used up all of the Lifetime Allowance?

The member’s personal representative (the person who is responsible for administering the estate of the deceased) is responsible for checking the LTA tax position and informing HM Revenue & Customs.

But any LTA charges must be paid by the person who receives the lump sum. The charges will be collected from them by HM Revenue & Customs. There is more information on the GOV.uk website, and available from HM Revenue & Customs.