Income Tax (Earnings and Pensions) Act 2003 section 637S

Availability of individual's lump sum and death benefit allowance

Section 637S explains how to determine how much of an individual's lump sum and death benefit allowance remains available each time a qualifying lump sum or lump sum death benefit event occurs, by deducting previously used tax-free amounts from the overall allowance.

• Each time an individual takes a qualifying lump sum or a lump sum death benefit is paid, the available allowance must be checked and reduced by the total of previous tax-free amounts used since 6 April 2024.
• Qualifying lump sums include pension commencement lump sums, serious ill-health lump sums, and uncrystallised funds pension lump sums; qualifying death benefits include all authorised lump sum death benefits except charity lump sum death benefits and trivial commutation lump sum death benefits.
• If no previous qualifying event has occurred since 6 April 2024, the full allowance is available; otherwise, the available amount is the allowance minus the aggregate of all previously used tax-free amounts, down to a minimum of nil.
• Where multiple qualifying events happen on the same day, the individual (or, for death benefits, their personal representatives) decides the order in which they are treated as occurring.