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TonyTax
TonyTax, Tax Consultant
Category: Tax
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I currently have income of £26,000 per annum and have

Resolved Question:

Hello. I currently have income of £26,000 per annum and have tax code of 1060L.
My husband died last summer and I have received a lump sum payment from his work pension of £113,000.
Is this lump sum liable to tax and if so, approx how much would I need to pay? I cannot get hold of HMRC and have not received notification from them despite completing and sending them a bereavement benefit coding form a few months ago when I received the payment.
Any advice would be helpful as I do not want to invest/ tie up the funds and then get landed with a tax bill that I may struggle to pay.
Linda
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Can you confirm whether your husband died whilst still working for the company that paid you the sum of £113,000 or that he was receiving a pension from that company please. If he was receiving a pension, did this stop when he died or are you now receiving a pension from the company?
Customer: replied 1 year ago.
No, my husband ceased working for the company some years ago but, as he was only 57 was not claiming the pension. As I am only 49' they paid me a lump sum payment; there was no option with this.
He was also retired from the army and was receiving an MOD pension, this ceased on death and I now receive a widows pension monthly, this was paid immediately. This is £4831 pa and I have been paying basic rate tax on this. My own salary is £21,500 pa and this is taxed on tax code 106L.
Expert:  TonyTax replied 1 year ago.
Thanks.

The payment from your late husband's former employer will almost certainly be a payout of either the value of his pension fund or the life assurance attached to it, whichever is higher. If that is the case, then the payment of £113,000 will not be taxable in your hands.

Your late husband would have specified you as the beneficiary of any such payout due on his death before taking the pension and the way it is structured ensures that it won't be taxable. There is no need to disclose the payment to HMRC. The company will confirm the nature of the payment if you contact them.

Any income generated by the investment of the £113,000 will be taxable to the extent it is not invested in ISAs.

The 1060L and BR tax codes being operated against your salary and pension respectively are correct.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15764
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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