Tax treatment of money purchase death benefit payments

Under the new Lifetime Allowance (LTA) replacement regime, one of the three new allowances is the Lump Sum and Death Benefit Allowance (LSDBA). If an individual took benefits prior to 6 April 2024 that used some or all of their LTA, their LSDBA may be reduced. Here is a rough guide from Fidelity Adviser Solutions – including a flowchart – to the tax treatment of money purchase death benefit payments.

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