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Tax exemption and death in service benefits

Q: My client provides a death in service benefit as part of the company pension scheme. At the moment, this benefit is tax-free to the employee only if the beneficiary is a member of the employee’s family or household. One member of staff has no family and lives alone so at present cannot benefit form this. I have heard that this is changing – what are changes and from when are they effective?

A: The existing exemption, in s307 ITEPA 2003, is to be amended with effect from 6 April 2019 so that the beneficiary can be any individual named by the employee, regardless of their relationship to the employee. At the same time, a further extension to the exemption will mean that employees can nominate a registered charity to be the beneficiary.