Reaching age 75: our top five frequently asked questions

We look at reaching age 75 in the latest in our series of top five FAQs on pensions technical topics.
  1. On death after age 75 how are death benefits taxed if paid to an individual?

    Regardless of whether the benefits are uncrystallised or in drawdown after age 75, the beneficiary will face marginal rate income tax on any benefits taken.  Death after age 75 is not a benefit crystallisation event (BCE) so there is no lifetime allowance tax charge payable on death after age 75. 

    Death benefits from April 2015

  2. Can you take PCLS after age 75?

    Yes.  If the product allows the individual to remain invested after age 75 then it is possible to take PCLS after age 75.  The individual should consider the taxation of death benefits as on death after age 75, the beneficiary will face marginal rate income tax on any benefits taken.  The right to PCLS therefore ends when the individual dies.  This entitlement does not pass to a beneficiary.

  3. If the benefits are paid to a discretionary trust on death after age 75 what tax charge applies?

    The provider will deduct a tax charge of 45% before paying the benefits to the trust.  This charge can be used as a tax credit by the ultimate beneficiary of the trust assets to offset their own income tax liability.

    PTM073010: Death benefits: lump sums: tax on authorised lump sum death benefits

  4. What BCEs can occur after age 75?

    The only BCE which can occur after age 75 is BCE 3.  This would occur when a pension in payment is increased beyond a certain level.  An amount is regarded as crystallising for lifetime allowance purposes when it exceeds both the threshold annual rate, and the permitted margin. 

    PTM088630: BCE 3 increase to a scheme pension in payment

  5. What BCEs occur at age 75?

    There are 3 BCEs which could occur at age 75.  BCE 5 occurs when there are uncrystallised benefits in a defined benefits scheme at age 75.  BCE 5A occurs when the member has benefits in drawdown at age 75 and BCE 5B occurs when the member has uncrystallised benefits in a money purchase scheme.

    PTM088650: BCE 5, 5A and 5B age 75
     

Note

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.

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Last updated: 18 Apr 2019

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.