PTM173000 - Lump sum allowance and lump sum and death benefit allowance: Relevant benefit crystallisation events
As of 6 April 2024 there is no longer lifetime allowance. If you are looking for information about protections, enhancement factors and the lifetime allowance charge please see these pages on听. If you are looking for information about the principles of lifetime allowance and benefit crystallisation events please see these pages of听.
What is a relevant benefit crystallisation event
Lump sum allowance and relevant benefit crystallisation events
Lump sum and death benefit allowance and relevant benefit crystallisation events
Order of the relevant benefit crystallisation event
Unauthorised member payments
Reports to HMRC
What is a relevant benefit crystallisation event听
Chapter 15A Section 637R ITEPA 2003
The legislation specifies the occasions when a scheme administrator must check whether a lump sum being paid to a member exceeds that member鈥檚 available lump sum allowance or lump sum and death benefit allowance.听听
These
occasions are known as relevant benefit crystallisation events.听听
When a relevant benefit crystallisation event occurs, the scheme administrator compares the value of the relevant benefit crystallisation event against the member鈥檚 available allowances. Any relevant benefit crystallisation event that exceeds the individual鈥檚 available lump sum allowance or lump sum and death benefit allowance will be subject to income tax at the recipient鈥檚 marginal rate.
Lump sum allowance and relevant benefit crystallisation events听
Chapter 15A Section 636Q ITEPA 2003
As of 6 April 2024, individuals have a lump sum allowance of 拢268,275 (unless they have protections, see PTM176100, or are required to utilise the transitional calculations, see PTM174100).听听
For the purposes of the lump sum allowance, a relevant benefit crystallisation event occurs when an individual becomes entitled to a relevant lump sum.鈥�听
A
relevant lump sum for the purposes of the lump sum allowance is:鈥�
- A pension commencement lump sum (PTM0632000)鈥�听
- An uncrystallised funds pension lump sum (PTM063300)鈥�
- A stand-alone lump sum (PTM063130)
听Whenever
a relevant benefit crystallisation event occurs this this must be tested
against the individual鈥檚 lump sum allowance.
Example
Georgina has a relevant benefit crystallisation event on 17 June 2025. She receives a pension commencement lump sum (PCLS) of 拢40,000.听听
She has had no other relevant benefit crystallisation events and has no protections. Therefore, her available lump sum allowance is 拢268,275.听
The amount of the relevant benefit crystallisation event occurring on 17 June 2025 needs to be deducted from this figure.听
拢268,275 - 拢40,000 = 拢228,275听
Georgina鈥檚
remaining lump sum allowance at 17 June 2025 is 拢228,275.
Lump sum and death benefit allowance and relevant benefit crystallisation events
Chapter 15A Section 637S ITEPA 2003鈥�听
听As of 6 April 2024, individuals have a lump sum and death benefit allowance of 拢1,073,100 (unless they have protections, see PTM176100, or are required to utilise the transitional calculations, see PTM174200).听听
听For the purposes of the lump sum and death benefit allowance, a relevant benefit crystallisation event occurs when an individual becomes entitled to a relevant lump sum or a person is paid a relevant lump sum death benefit in respect of the individual.鈥�听
听A relevant lump sum for the purposes of the individual lump sum and death benefit allowance is:鈥�听
- A pension commencement lump sum (PTM063200)鈥�
- A stand-alone lump sum (PTM063130)
- A serious ill-heath lump sum (PTM063400)鈥�听
- An uncrystallised funds pension lump sum (PTM063300)鈥�听
A relevant lump sum death benefit for the purposes of the lump sum and death benefit allowance means any lump sum death benefit other than:鈥�听
- 听A charity lump sum death benefit (PTM073900)鈥�听
- A trivial commutation lump sum death benefit (PTM073700)鈥�听
听A
relevant lump sum death benefit does not include a lump sum death benefit if it
is paid in respect of rights that were crystallised before 6 April 2024.
Example
Bret died on 15 August 2025, aged 72. An uncrystallised funds lump sum death benefit of 拢100,000 was paid to his beneficiary on 23 October 2025.This is a relevant benefit crystallisation event.听听
He has had no other relevant benefit crystallisation events and has no protections. Therefore, his available lump sum and death benefit allowance is 拢1,073,100.听听
The amount of the relevant benefit crystallisation event needs to be deducted from Bret鈥檚 lump sum and death benefit allowance.听
拢1,073,100 - 拢100,000 = 拢973,100听
Bret鈥檚 remaining lump sum and death benefit allowance at 23 October 2025 is 拢973,100.听
Order of the relevant benefit crystallisation event
听Lump sum allowance
听Where an individual has more than one relevant benefit crystallisation event on the same day, the individual can decide the order in which they are considered to occur.听听
Example
John is paid a pension commencement lump sum (PCLS) of 拢30,000 and an uncrystallised funds pension lump sum (UFPLS) of 拢20,000 on 14 June 2024. These are both relevant benefit crystallisation events occurring on the same day.鈥€�听
听John鈥檚 available lump sum allowance is 拢268,275.鈥�听
听John can decide which event should be considered to have occurred first.鈥€�听
听John decides that the uncrystallised funds lump sum payment of 拢20,000 occurs first. 75% of the UFPLS will be subject to income tax at his marginal rate, and 25% will be tax-free if he has sufficient lump sum allowance available.鈥€�听
听The tax-free element of the UFPLS needs to be deducted from his lump sum allowance.鈥€�听
听25% of 拢20,000 = 拢5,000鈥�听
听拢268,275 - 拢5,000 = 拢263,275鈥�听
听John鈥檚 available lump sum allowance following the UFPLS deduction is 拢263,275.鈥�听
听Then the PCLS of 拢30,000 needs to be deducted from John鈥檚 lump sum allowance.鈥�听
听拢263,275 - 拢30,000 = 拢233,275鈥�听
听John鈥檚
lump sum allowance at 14 June 2024 is 拢233,275.鈥�
听Lump sum and death benefit allowance
Where an individual has more than one relevant benefit crystallisation event on the same day, they are to be treated as occurring:
- Immediately before the individual鈥檚 death,听and
- Immediately after any PCLS to which the individual become entitled immediately before death
An individual's LSDBA availability on the occurrence of multiple relevant benefit crystallisation events occuring if they have previously had BCEs is the amount left after the previously-used amount is deducted and the relevant proportion is deducted.听
The relevant proprortion is:
A/B
Where:
A - the amount of the lump sum death benefit which relates to the relevant benefit crystallisation event in question,
B- the aggregate of the amounts of each lump sum death benefits being paid which constitutes relevant benefit crystallisation events on the same day
Unauthorised member payments听
Where scheme funds are used to provide a benefit or make a payment that does not conform with the pension rules, lump sum rule or lump sum death benefit rule (and is not one of the other authorised member payments) that payment is an unauthorised member payment.听
An unauthorised member payment is not a relevant benefit crystallisation event.听
For example, if a lump sum is paid which
does not satisfy the conditions to be any type of authorised lump sum payment,
the lump sum would be taxable on the individual as an unauthorised member
payment, and there may also be a scheme sanction charge for the administrator.
Reports to HMRC
Regulation 3 The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567听
听The scheme administrator is required to report certain events to HMRC, using the Pension Schemes Online Service.听
For example, if the member is relying on an entitlement to an enhanced or protected lifetime allowance the scheme administrator must report this to HMRC.听听
For details of the event report, see鈥�PTM161100.听