LTA tested for DC Death Benefits

[meldrewlives]

I had understood that the final point at which the LTA is tested is age 75.

However, in an old Investors Chronicle article that I happened to come across this morning I noted a comment that if the deceased was over 75 then not only would those inheriting under the Death Benefits provision pay tax at their marginal rate for any income taken, they would also pay the surcharge "if the pension pot exceeded the LTA".

I took that to mean the deceased's LTA but I don't see how that could work, particularly if little income was taken and the pot(s) (if multiple beneficiaries) continued to grow.

That wasn't my understanding but can anyone clarify this?

[scrumpyjack]

The Pru has loads of detail on all this.
https://www.pruadviser.co.uk/knowledge- ... allowance/

I haven't studied it in depth but it does say the rules on this changed in April 2015 and I think that post 75 the LTA no longer applies on death. So if the IC article is pre Apr 2015 it may not be applicable.

I'm sure some other lemon will answer your question!

[OLTB]

I had understood that the final point at which the LTA is tested is age 75.

However, in an old Investors Chronicle article that I happened to come across this morning I noted a comment that if the deceased was over 75 then not only would those inheriting under the Death Benefits provision pay tax at their marginal rate for any income taken, they would also pay the surcharge "if the pension pot exceeded the LTA".

I took that to mean the deceased's LTA but I don't see how that could work, particularly if little income was taken and the pot(s) (if multiple beneficiaries) continued to grow.

That wasn't my understanding but can anyone clarify this?

Hi meldrewlives

Under the Benefit Crystallisation Event (BCE) regs, you are correct to say that the beneficiary will face marginal rate income tax on any benefits drawn if the deceased was over age 75.

Death is not a BCE after the age of 75 though so there is no LTA charge payable on death after age 75.

Here's some info https://adviser.royallondon.com/technic ... five_faqs/

Cheers, OLTB.

[meldrewlives]

Thanks for the replies and the links.