febrero 14 2024

Abolition of the lifetime allowance – Excepted group life assurance arrangements for death in service benefits

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As employers will be aware, the lifetime allowance (LTA) will be abolished from 6 April 2024. The LTA is the maximum amount of tax-relieved savings that an individual can build up in registered pension schemes over their lifetime. The abolition of the LTA raises a number of areas for consideration by employers, one of which is lump sum death in service benefits.

Currently, lump sum death in service benefits paid in respect of members of registered pension schemes are typically tax-free. The main exception is where the benefit exceeds the member’s available LTA. In that case, the excess is subject to the LTA charge (55% until 5 April 2023 and the recipient’s marginal tax rate since then).

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