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31Top-up defined benefits lump sum death benefit treated in same way as original payment#
(1)Paragraph (2) applies where—
(a)a defined benefits lump sum death benefit is at any time paid under a registered pension scheme in respect of the death of an individual,
(b)the payment is made before the end of the relevant two-year period,
(c)as a result of a relevant rectification provision the amount of the defined benefits lump sum death benefit payable under the scheme in respect of the death increases,
(d)an amount (“the top-up DBLSDB”) is paid in respect of the increase, and
(e)the top-up DBLSDB is not paid before the end of the relevant two-year period.
(2)The top-up DBLSDB is to be treated for the purposes of the provisions listed in paragraph (3) as having been paid before the end of the relevant two-year period.
(3)The provisions referred to in paragraph (2) are—
(aa)section 637H of ITEPA 2003 (tax treatment of defined benefits lump sum death benefits);
(b)section 206(1B) of FA 2004 (circumstances in which payment of defined benefits lump sum death benefit is subject to the special lump sum death benefits charge);
(c)paragraph 16(a) of Schedule 32 to FA 2004 (circumstances in which payment of defined benefits lump sum death benefit constitutes a benefit crystallisation event 7).
(4)In this regulation “the relevant two-year period” means the period of two years beginning with the earlier of the day on which the scheme administrator of the scheme first knew of the individual’s death and the day on which the scheme administrator could first reasonably have been expected to have known of it.
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