Self assessment

sunnystar

Hi, hopefully someone can point me in the right direction please. This isn't my usual username, as ive forgotten password and the resetting isn't working :-( .

I'm about to complete my self assessment, I am self employed and complete the short assessment pages. Normally all fine. However this year I've got a pension from a deceased family member. Hmrc have been taxing 20% tax from this via a paye br tax code. Where abouts on the self assessment does this need to go, as I don't want to pay tax twice on this amount.

Also I received a small lump sum of approx 1k as part of another pension fund ( from same deceased family member). The info I have on this says the amount is net of 55% tax. Does this mean I add on 55% and declare that amount! or do I declare the 1k and pay 20% tax on it! or do I not pay tax on it as 55% has already been paid. And again what section does this go under.

Sorry for so many questions.

Thanks in advance for any help.

nomunnofun

When commencing your return (tailoring your return), you are asked specific questions about the types of income received. One of them will be - are you in receipt of a UK pension? YOu will then be given the opportunity to enter both the income and the tax deducted.

jamesd

There is no income tax due from the recipient of a pension lump sum of that sort. The 55% tax charge covers the whole cost.

sunnystar

Thanks for the info

John_Pierpoint

jamesd wrote: »

There is no income tax due from the recipient of a pension lump sum of that sort. The 55% tax charge covers the whole cost.

........and so it should, but does it need to be mentioned anywhere as income; or has it become a payment of capital ?

Delphina

The lump sum needs no mentioning on the return. But the monthly income which is not the lump sum is taxable, so its gross annual amount and tax deduction figures need to be on your return as per nomunnofun's post.

By declaring how much tax has been paid, you will not be taxed twice. By not declaring PAYE pay and tax figures, your tax calculation will be wrong.

sunnystar

Hi, spoke to hmrc, and was advised to declare it on tax return and as I only pay 20% tax, I will get a 35% rebate ! Woohoo!

jem16

sunnystar wrote: »

Hi, spoke to hmrc, and was advised to declare it on tax return and as I only pay 20% tax, I will get a 35% rebate ! Woohoo!

That doesn't sound correct. Are you sure you informed HMRC that it was a death benefit lump sum payment?

http://www.hmrc.gov.uk/pensioners/passing-tax.htm#4

If you die after taking benefits

If you die after taking benefits, any death benefits payable as pension income to a dependant will be taxed as income in the normal way.

If the pension scheme provided for a lump sum payment this will be taxed at 55 per cent. This is payable by the scheme administrator.

Delphina

IMHO HMRC thought that it was trivial pension lump sum. Did you only talk to telephone advisor not tax technician? If yes, check again!

jimmo

John_Pierpoint wrote: »

........and so it should, but does it need to be mentioned anywhere as income; or has it become a payment of capital ?

No and yes, in that order. As a general rule the 55% tax charge is assessable on the pension scheme administrator, not on the recipient. However, whilst the recipient is not taxable on the lump sum (because it is not income) the pension scheme administrator is entitled to cover his liability from the lump sum.

Here’s an example.

http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM10106020.htm#IDAGKFSH

sunnystar

Oh I'm confused lol. Hmrc said I should declare it on tax return. And I did only speak to a phone advisor. The pension scheme administrator paid the 55% tax.

So does this count as taxable income for me ? Do I have to declare it as income on tax credits then? Or is it capital ?

Thanks for help