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HMRC internal manual

Employment Income Manual

Non-approved schemes: example: payment on death by accident

Section 612(1) ICTA 1988

An employee died on 1 April 2005 after falling from the roof at home at the weekend. The employer decided to make an ex-gratia payment of £25,000 to the spouse and did so on 1 June 2005. Since the payment is made before 6 April 2006, you have to consider the non-approved scheme rules (see EIM15400).

The payment is not chargeable under the non-approved retirement benefits scheme legislation. To be chargeable, a payment must be from a retirement benefits scheme (see EIM15402). That means there must be a relevant benefit, and the following is specifically defined by Section 612(1) ICTA 1988 as not being relevant benefits for non-approved scheme purposes:

  • any benefit that is to be afforded solely by reason of the disablement by accident of a person occurring during his or her service or of his or her death by accident so occurring and for no other reason.

The fact that the accident happened whilst the employee was off duty at home does not matter: the accident is during his or her service if it happens at any time whilst he or she was an employee.

For payments on death otherwise than by accident, see example EIM15435.