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Section 393B ITEPA 2003

[Notice: the guidance on this page should be read with the notice at the top of EIM15015]

Note: If a lump sum death benefit is paid on the non-accidental death of an employee during service provided under scheme rules which were in place before 6 April 2006 then the benefit is not a relevant benefit - see item 2 of the list of excluded benefits under regulations at EIM15021.

An employee died of natural causes on 1 September 2006.

»Ê¹ÚÌåÓýapp director of the personnel department of the company the employee worked for decides to make an ex-gratia payment to the employee’s spouse of £50,000. This payment is in addition to a lump sum of £12,500 payable to the employee’s estate under the terms of the employer’s registered pension scheme (see EIM15010 sub-heading on registered pension schemes and EFRBS).

»Ê¹ÚÌåÓýapp £50,000 payment is made on 20 September 2006. Because this date falls after 5 April 2006, you consider whether the scheme is an employer-financed retirement benefits scheme (see EIM15010).

A gift on death in these circumstances is a ‘relevant benefit� (see EIM15021) so an employer-financed retirement benefits scheme is created by the payment (see EIM15048).

»Ê¹ÚÌåÓýapp payment is chargeable on the spouse of the employee and counts as employment income (see EIM15055) for the year of receipt 2006/07 (see EIM15058).