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bigduckontax, Accountant
Category: Tax
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I was awarded A LONG TERM COMPENSATION . By the MOD Accepting

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I was awarded A LONG TERM COMPENSATION . By the MOD Accepting responsibility for the death of my husband. In 2013
Since then I have been paying tax on the L T C including some at the higher rate.
There are certainly mixed messages Do I don't I pay Tax.
Do you know the answer please.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Please note that Just Answer is not part of HMRC, indeed it has nothing to do with that Department being an independent tax advice site.
Compensation for deaths in such cases would normally be outside the UK taxation envelope, but a MOD pension granted against your husband's service under The Pensions Warrant would be taxable. However, the authority paying such a pension would normally operate PAYE procedures to ensure that you are tax neutral at the end of every tax year. However, if you are in receipt of Bereavement Allowance which runs for a year this is taxable, but paid gross which, unless your tax code has been adjusted accordingly, could throw a spanner in the works. If you are not in receipt of this benefit the form BB1 is used to claim it is available at all Job Centres.
To be in higher rates tax you would have to be earning a taxable income in excess of GBP 31865 per annum after deduction of your personal allowance of 10600. Clearly something is wrong here, but you have done the correct thing writing to the relevant tax office asking for an explanation. It should resolve itself, but please remember that HMRC are very short staffed these days and it will probably take a month for anything to happen.
I do hope that I have helped shed some light on your situation.
Customer: replied 2 years ago.
You have assumed that the payment is a pension At no time has it been described as a pensionF N T
I have not assumed that it was a pension, I merely drew your attention to the fact that if a pension has been awarded under the Pensions Warrant it is subject to income tax as indeed is Bereavement Benefit. It would be normal for a deceased serviceman's widow to receive such a pension irrespective of any other compensation. I am aware of one case where a widow who was herself serving received full army pay plus a half rate widow's pension from the MOD in respect of her husband who died whilst in service plus a widow's pension from the State which current widows no longer receive, the benefit rules having changed.
I reiterate that compensation for death, presumably, in this case, in lieu of damages, is usually outside the taxation envelope. As far as I can see from the tenor of your question you have done the correct thing by raising the matter with your tax office.
Customer: replied 2 years ago.
It is a mind field addad to which ,there are seemingly many departments involved in the various stages of the final decisionThank you for your time F N T
You are quite correct although the MOD are very good in this area. You may find that the War Pensions Agency has become involved; they can be contacted at: Norcross, Blackpool, FY5 3WP, Tel: *********** and they are equally efficient. Then, of course, there is your own tax office.
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