Neil MacGillivray: Don't forget the three golden rules of the 'CLSDB'

I had an enquiry lately where the member of a self-invested personal pension died in his late 70s. He had a substantial pension fund but had left no nomination and had no family. In his will he left his estate to a charity and, based on this, the scheme trustees made the decision to pay the lump sum death benefit to the same charity. The charity initially thought the lump sum would be tax-free but was about to find out the tax implications were far from straight forward. In order for the death benefit to qualify as a ‘charity lump sum death benefit' (CLSDB), and therefore be paid tax fre...