Tax return and inheritance - please help

dollydo

Cutting a long story short, I'm self employed and just returned my completed tax return. A family member has recently passed away and I've just been informed by executer that I'm a beneficiary of a small monthly pension. Payment started this month, but last months payment ( april's) will be added to this months payment. Is this classed in come for this current tax year 2013-2014, or does Aprils amount have to be declared for last year even though I haven't received it until the end of this month. Worried. Help please !

anamenottaken

dollydo wrote: »

Cutting a long story short, I'm self employed and just returned my completed tax return. A family member has recently passed away and I've just been informed by executer that I'm a beneficiary of a small monthly pension. Payment started this month, but last months payment ( april's) will be added to this months payment. Is this classed in come for this current tax year 2013-2014, or does Aprils amount have to be declared for last year even though I haven't received it until the end of this month. Worried. Help please !

You account for tax on income in relation to the point in time in which the income is received.

For example you may be paid on 10 April 2013 for work you did in March but it counts as income for the tax year 2013-14 not 2012-13.

Will you be receiving payments at the end of a month as a regular thing or normally at the start. If at the beginning of the month (ie within first 5 calendar days) then the April 2014 payment, if taxable, will be for tax year 2014-15.

dollydo

And the same applies for pension payments? Thank you so much. I might just finally stop stressing now. I thought it was, but wasn't sure. Thanks once again.

anamenottaken

dollydo wrote: »

And the same applies for pension payments? Thank you so much. I might just finally stop stressing now. I thought it was, but wasn't sure. Thanks once again.

Salary, pensions, dividends, interest - all when received.

anamenottaken

By the way you do need to check whether the payments you receive are taxable. Not all are. It depends on a number of factors. The organisation paying the pension could probably help - or contact HMRC will all relevant facts.

dollydo

Thanks for all your info. Payments will be made on the 1 st of each month from june. So I'm assuming that April 2014 payment will be included in 2013-2014. Is this correct. I believe that tax will already be taken off by the pension company before I receive it.

jimmo

anamenottaken wrote: »

Salary, pensions, dividends, interest - all when received.

Technically that’s wrong. Pensions are usually, but not always, taxable on the accruals basis, not receipts, but it would only be in exceptional cases that HMRC would worry about it.

http://www.hmrc.gov.uk/manuals/eimanual/EIM74101.htm

dollydo

Then pension is only a £100 or so, so I think I'll hopefully roll it into this years amounts. Thanks for all the info