Tax on death (with effect from 6th April 2015)


When you die, any nominated Beneficiaries of your pension will normally have the choice of taking the fund as a lump sum or leaving the fund invested and using it to provide an income.

If they choose to leave the fund invested they can take income as and when required. Any funds left invested will continue to benefit from being in the tax-advantaged pension wrapper.

The tax rate no longer varies depending on whether or not you are taking your pension at the time of your death.


Death before age 75 - Uncrystallised and crystallised funds

  • Fund available as lump sum without tax deduction (for uncrystallised if within the lifetime allowance (excess taxed at 55%)

  • Beneficiary access to pension fund flexibly, at any age, free of tax

  • Dependants annuity taxable at marginal rate


Death after age 75 - Uncrystallised and crystallised funds

  • Lump sum to beneficiary less 45% recovery charge. The Government have stated their intention that this will be the recipient's marginal rate of income tax from 2016/17

  • Beneficiary access to pension fund flexibly, at any age, taxable at marginal rate

  • Nominate a beneficiary annuity taxable at marginal rate


The changes announced now provide some excellent planning opportunities in preserving wealth and further enhance the taxation benefits of Pensions.


It is important you continue to review any existing arrangements in line with the legislation changes.