Is inherited pension taxable

THECOSMOS

HI people, my step father recently died and un be known to my mother had a pension from years ago, she has since had to get probate to be able to claim this money, its only £12,000 so not a great deal of money to some people but this will help her clear debts and make life a bit easier for her, what we dont know is if this sum will be taxable and if so when she recieves it what does she need to do.

Thanks for taking the time to read this and i hope someone can help.

Dunroamin

Does she claim any means tested benefits?

THECOSMOS

No, she was on council tax and rent benefits but i have moved in with her as she was struggling to cope and now that my wage has been taken into consideration she receives no benefits at all.

Well apart from her state pension that is

McKneff

no tax is due to be paid from this money,

If she is going to put it into an account and she does not have income over 8105£ then she needs to fill in an R85 form so she doent pay any tax on the interest.

THECOSMOS

Thanks, the money will be going into an account but not for long as the majority of it will be used to pay some outstanding debts she has, of the 12,000 she seems to think only just over 2,000 will be left after paying these.

McKneff

thecosmos wrote: »

Thanks, the money will be going into an account but not for long as the majority of it will be used to pay some outstanding debts she has, of the 12,000 she seems to think only just over 2,000 will be left after paying these.

So no problem then, tell her she must treat herself too (and hopefully you)

Dont forget the R85 though, better in her pocket than the taxman.

Is she on full state pension ie around £107 a week plus.

Just as an aside and a just in case because things happen in life, ie you may move out or
other things happen, read up on 'deprivation of assets' just in case it is relevant.

THECOSMOS

She currently receives 129 a week in state pension, it increased to this when my stepfather died, I have already insisted she treats herself a little as im sure he my step father would have wanted this.

Will look into your suggested reading too, thanks for your help regarding this, its much appreciated :-)

McKneff

thecosmos wrote: »

She currently receives 129 a week in state pension, it increased to this when my stepfather died, I have already insisted she treats herself a little as im sure he my step father would have wanted this.

Will look into your suggested reading too, thanks for your help regarding this, its much appreciated :-)

She really should be enquiring if she is entitled to any further benefits too. Possibly pension credit.

It is possible, even if you are living there. One day you will want to move on,

Good luck to you both.

sleepless_saver

If her only income is £129 state pension, and she has/had £12000 in capital then even with you staying she should be entitled to guarantee pension credit which would mean that most of her rent and council tax would be paid in full. There would be a small deduction for your contribution. She should phone the Pension Service 0800 99 1234 to claim. See link for what she info she needs to tell them about.

(Pension Service may well want to treat her as if she still has the £12k. It won't make much difference either way as the first £10k is ignored and on the figures you give she would still be entitled to benefits.)