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Pay tax on Pension Compensation?
Valcor
Posts: 7 Forumite
Hi all,
We have just received a letter saying we are to get £20K compensation for the fact that my husband had been advised to take money out of a company pension and put it into a private pension plan that we are still with now. (he should (?) retire in 9 years).
The letter says we may have to pay tax on some , or all, of the compensation amount. Does this mean now or later, if at all? Any advice gratefully received?
Sue
We have just received a letter saying we are to get £20K compensation for the fact that my husband had been advised to take money out of a company pension and put it into a private pension plan that we are still with now. (he should (?) retire in 9 years).
The letter says we may have to pay tax on some , or all, of the compensation amount. Does this mean now or later, if at all? Any advice gratefully received?
Sue
0
Comments
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The letter says we may have to pay tax on some , or all, of the compensation amount. Does this mean now or later, if at all? Any advice gratefully received?
Depends on the compensation and how its paid. If it includes interest, then that interest is taxable.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
hi dunstonh, thanks for reply - all I know at the moment is that the compensation will be paid straight into our present pension??
Sorry I don't know much more:(
Sue0 -
If the pension value is being increased (which is a common method), then you shouldnt have any interest to pay.
The letter may be a standard one they use in cases where they pay the other method and include interest.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Dunstonh - Many thanks for your advice
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