PTM165400 - Information and administration: information a trustee in receipt of a taxable lump sum death benefit must automatically provide to the trust beneficiary

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Regulation 10B The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567

Section 206(8) Finance Act 2004

Certain lump sum death benefits are taxable. When they are paid to a trust, rather than an individual, and it is not a bare trust, the scheme administrator is liable to pay the special lump sum death benefits charge. The rate of the tax charge in these circumstances is 45% of the lump sum payment. Individual beneficiaries of the trust who indirectly receive part of that lump sum as a payment from the trust may be liable at a lower rate of income tax on the amount they receive, and may be able to claim a refund of some or all of the tax paid by the scheme administrator. To do so they will need to know both the amount of the lump sum they received before tax was deducted as this is the figure on which they will have to pay tax, and the tax paid by the scheme administrator (see PTM073010).

The information that the scheme administrator must provide to the trustee is explained at PTM165100.

The trustee, in turn, must provide the following information to the beneficiary, when they make a payment to an individual beneficiary of the trust comprising of a lump sum death benefit paid to the trust on or after 6 April 2016 that has been reduced by the special lump sum death benefits charge:

  • the gross amount of the payment: that is the total of the sum paid to the beneficiary plus the amount of special lump sum death benefit charge in respect of that sum,
  • (separately to the gross amount) the amount of special lump sum death benefit charge in respect of the sum paid to the beneficiary,
  • the name and pension scheme tax reference number of the pension scheme, and
  • the name, date of birth and date of death of the member of the pension scheme in respect of whom the lump sum death benefit was paid.

The trustee must provide the information within 30 days, starting on the latest of

  • the date of the payment to the trust beneficiary, or
  • the date the trustee received the corresponding information from the scheme administrator.