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Hi, My wife has just died and left some money in a SIPP which will come to me. Unfortu

Resolved Question:

Hi,
My wife has just died and left some money in a SIPP which will come to me. Unfortunately I am very close to the Extended Lifetime Pensions Allowance of £1.8m. Will this take me over the LTA or is there a way to avoid this?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question and asking for me, and may I say how sorry I am for your loss.
Whilst there was the ability to ask for protection from 2013/2014 to 2014/2015 on the lifetime allowance, due to it changing from 1.5 million to 1.25 million, this was capped at 1.5 million for 2014/2015 whereas you state you are close to 1.8 million already. So there may be a charge arising anyway on the exiting position, so do check with your pension provider.
I would be inclined to take this as a lump sum, rather than add to your existing fund, and it will not be subject to Inheritance tax as the assets of a will passed to the surviving spouse are not liable to Inheritance tax, only consideration for those left to other beneficiaries, and where this exceeds the £325,000 limit.
And the lump sum should be payable tax free, although do check with the pension provider as to the options available.
Thanks
Sam
Sam, Accountant
Category: Tax
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