55% tax on Late Father pension

McScoot

I’m hoping someone can give me advice regarding my late father’s pension.

2 years ago my father was contacted and advised he had a small pension scheme that had never been activated. So, at the
Age of 75 he started receiving contributions each month. Part of the scheme policy was if he died within 5years of commencement od the policy, a lump sump sum was payable to the beneficiaries.

Sadly this summer at the age of 77 he passed away which meant I was entitled to the remainder of the 5 year agreement.

Here’s the specifics – the lump sum is £4963 but I only received a cheque for £2118 because it was taxed at a whopping 55% …. Is there any way I can appeal the 55% tax rate?????

I feel it’s unjustly high based on the very small amounts my father received in contributions.

thank you ...Stuart

xylophone

Standard in this situation?http://www.scottishlife.co.uk/scotlife/Web/Site/faq2.asp?category=Death

jamesd

The 55% tax rate could be wrong if:

1. you were his spouse and took the money into a pension pot in your own name, instead of outside a pension pot.
2. you were a financial dependent as that's defined in the regulations, which is extremely restrictive.

Other than that the 55% tax charge is normal. It's not like a non-taxable insurance payment but just handing over some of the original pension pot, in theory.

The way you get some or all or more than the 55% back is to use the money to make pension contributions of your own.

McScoot

thank you for this.