Lump sum death benefits

Sleeplessinarattle

Hi all

I’d appreciate any advice on the following.

Recently a relative died and there is some money in an investment fund. I’ve applied to have this paid as a lump sum but have received the following from them:

The Lifetime Allowance was abolished on 6 April 2024, however as you may be aware, there have been some challenges faced by platforms, advisers, clients, and personal representatives in navigating the new rules due to delays receiving guidance from HMRC.

On 4 April, HMRC released a newsletter in which it suggests that some beneficiaries may wish to delay taking lump sum death benefits until it can remedy incorrect legislation.

HMRC advise that certain groups of people may wish to delay action until regulations are passed through Parliament to correct the legislation. Those affected by HMRC’s advice relate to any case which involves the payment of a lump sum death benefit from funds which crystallised before 6 April 2024. Therefore HMRC have suggested that personal representatives may wish to advise beneficiaries to delay the payment until the legislation is effective.

The relative was under 75 when they died and the money is less than £268k, so am I right in thinking this doesn’t apply to me and the money will be paid tax free as the legislation intended? 

Thank you

Mark_d

This text from HMRC only applies to pension arrangements

Sleeplessinarattle

Yes sorry, I think it is a SIPP

Marcon

Sleeplessinarattle said:

Hi all

I’d appreciate any advice on the following.

Recently a relative died and there is some money in an investment fund. I’ve applied to have this paid as a lump sum but have received the following from them:

The Lifetime Allowance was abolished on 6 April 2024, however as you may be aware, there have been some challenges faced by platforms, advisers, clients, and personal representatives in navigating the new rules due to delays receiving guidance from HMRC.

On 4 April, HMRC released a newsletter in which it suggests that some beneficiaries may wish to delay taking lump sum death benefits until it can remedy incorrect legislation.

HMRC advise that certain groups of people may wish to delay action until regulations are passed through Parliament to correct the legislation. Those affected by HMRC’s advice relate to any case which involves the payment of a lump sum death benefit from funds which crystallised before 6 April 2024. Therefore HMRC have suggested that personal representatives may wish to advise beneficiaries to delay the payment until the legislation is effective.

The legislation relating to the Lifetime Allowance was both rushed and flawed, and is currently a right dog's breakfast.

Sleeplessinarattle said:

The relative was under 75 when they died and the money is less than £268k, so am I right in thinking this doesn’t apply to me and the money will be paid tax free as the legislation intended? 

Thank you

Almost certainly, but have a word with the provider of the deceased's SIPP before you do anything else. Without knowing the full picture, it's impossible to know. It isn't a case of what applies to you, but what applied to them - especially if they had other substantial pension benefits elsewhere which they'd already taken.