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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13858
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Hi I am due to have a 36K terminal grant from the Military

Resolved Question:

Hi
I am due to have a 36K terminal grant from the Military in August. Half of this grant will go to my ex spouse. Please can you tell me how much Income Tax I will have to pay on this lump sum?

Regards

Terry
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi Terry

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

Could you advise
1) can you expand on this lump sum, as you refer to it as a grant? Is it due to you leaving the military - or a lump sum pension payment -
2) Will the Military pay half of this lump sum to your ex wife, or will the full payment come to you, and you then pay half over to her
3) What is your annual income (other than this lump sum) going to be for this tax year?


Thanks

Sam
Customer: replied 3 years ago.


Hi Sam


 


It's the gratuity lump sum which will be paid 21 days after I leave due to completion of 22 years service. I will still receive monthly pension which my ex has no right to as per the divorce settlement. I have been told by the Military Pension service that they will pay half directly to my ex spouse. My current salary is £38,094 which equates to £2,289 net. This will cease on 19.8.14 my termination date. I will be unemployed from then but I am training for a new career where I will be self employed. I hope this helps? Regards Terry

Customer: replied 3 years ago.

Apologies Sam, The lump sum will be £32,000 not £36,000. Regards Terry

Expert:  Sam replied 3 years ago.
Hi Terry

Thanks for your response and the additional information.

You will then be paid £16,000 of the £32,000 which should see £30,000 of this tax free and the balance of £2000 taxed at 20% = £400

But you will need to check with the pension payer whether they plan to
1) Consider tax on the lump sum as a whole, and then distribute the balance as a half share each it
OR
2)Look at each of your half shares, in which case your share will be tax free
OR
3) have already hived off your ex wifes half share into her own pension arrangements as instructed by the financial settlement part of the divorce, in which case, again you will get £16,000 which will be paid tax free.

But the easy solution is to contact the pension payer and ask them how they manage these types of situation.

Thanks

Sam





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