How to tell HMRC about a lump sum death benefit charge
If you’re a legal representative, find out the information you need to tell HMRC to calculate the lump sum death benefit charge.
You must calculate the member’s available lump sum and death benefit allowance at the time of the benefit payment to determine if a chargeable amount has arisen on the lump sum death benefit. You only need to do this if the deceased member was under 75 when they died. If they were 75 or over, the scheme will deduct the necessary tax.
To check if a chargeable amount has arisen, you must calculate both the:
- member’s available lump sum
- lump sum and death benefit allowance at the time of the benefit payment
In doing this, you should take care, and act based on the information available to you.
What you must do as a legal representative
The lump sum death benefit is £1,073,100 for most individuals. It could be more if the deceased member had protected allowances.
You are responsible for checking whether a chargeable amount arose after the member’s death and on the payment of a relevant benefit crystallisation event (RBCE).
An RBCE payment is when a deceased member’s beneficiaries are entitled to a lump sum death benefit. It uses up some of the member’s available lump sum and death benefit allowance.
You must check if the deceased member’s available allowance covers the payments being made, considering:
- protected allowances
- crystallised amounts from earlier RBCEs occurring in the member’s lifetime, which will have reduced their available allowance
If you calculate a chargeable excess over the lump sum and death benefit allowance, you must report this to HMRC.
You should complete the information in this form, before printing and sending the details to HMRC.
What you’ll need
You should get all of your information together before you start. You will fill this form in online and you cannot save your progress.
You will need to provide the following information to complete the form:
- your name, address and contact details
- the deceased member’s date of birth, date of death, National Insurance number, details of any protected allowances and amount more than the lump sum death benefit allowance (or their protected allowance)
- the deceased member’s pension schemes’ details
- the name, date of birth, address, National Insurance number, and the total amount of benefits received for each beneficiary
What happens next
When we receive the form, we will raise the appropriate charge for each beneficiary. This is based on their marginal tax rate.
We cannot raise charges until the tax year has ended. This is because we will not be able to determine their marginal rate until this point.
If the beneficiary completes a Self Assessment, we will not be able to raise the charge until they submit their return.
We will send the assessment notice to the beneficiaries by post. This will include the charge reference and amount due.
You must use the 14-character charge reference when making a payment. We can then allocate the payment correctly.
If the beneficiary disagrees, they can appeal to HMRC. Instructions on how to appeal are on the charge notice.
They can appeal in writing within 30 days of the date of the notice.
Updates to this page
Last updated 23 August 2024 + show all updates
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Clarified that you cannot save your progress when completing the online form.
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Guidance has been added to the page to confirm you only need to calculate the member's available lump sum if they were under 75 when they died.
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First published.