Lump Sum and Death Benefit Allowance (LSDBA)?

Barbados7

Trying to clarify exactly how this works ......

Since abolition of the Lifetime Allowance in April 2024 the LSDBA appears to me to effectively equal the new Lump Sum Allowance (LSA) of a maximum £ 268,275 tax-free cash (25%) over all pensions.

It seems that upon a pension holder's death aged pre-75, a beneficiary may receive any unused (uncrystallised) amount of the LSA tax-free cash of £268,275 also tax-free and all subsequent withdrawals made by the beneficiary from the pension would additionally be tax free.
 
However, should death occur post age 75, any remaining unused (uncrystallised) amount of the LSA £268,275 is effectively lost and becomes taxable at receipt by the beneficiary, as would any income drawings made by the beneficiary against the remaining pension.

Most grateful for any comments, confirmation, or even whether I have missed a vital aspect of this please? Thanks.

xylophone

Does this help?


https://techzone.abrdn.com/public/pensions/LSDBA-tech-guide#:~:text=With the abolition of the,death benefit allowance (LSDBA).

Barbados7

Thank you xylophone. Looks to confirm my understanding.

Albermarle

Barbados7 said:

Trying to clarify exactly how this works ......

Since abolition of the Lifetime Allowance in April 2024 the LSDBA appears to me to effectively equal the new Lump Sum Allowance (LSA) of a maximum £ 268,275 tax-free cash (25%) over all pensions.

It seems that upon a pension holder's death aged pre-75, a beneficiary may receive any unused (uncrystallised) amount of the LSA tax-free cash of £268,275 also tax-free and all subsequent withdrawals made by the beneficiary from the pension would additionally be tax free.
 
However, should death occur post age 75, any remaining unused (uncrystallised) amount of the LSA £268,275 is effectively lost and becomes taxable at receipt by the beneficiary, as would any income drawings made by the beneficiary against the remaining pension.

Most grateful for any comments, confirmation, or even whether I have missed a vital aspect of this please? Thanks.

Your understanding seems correct. We try to avoid too much speculation on the forum, but it is worth being aware that there are indications that some of these rules may get changed by the new government. At some unknown point, maybe....

Barbados7

Thanks Albermarle, yes, we shall see......