Unauthorised Tax on Pension

aperture

First, sorry if this isn't the right section, i wasn't too sure exactly where would be appropriate for this topic.

In 2006 my father passed away, due to a few things (age/education), i was entitled to a monthly pension. This eventually stopped a few months ago, since i've finished education and will now start to work.

In 2012, i was told that the pension would be taxed at 40% since it has now become unauthorised. Here's the message that i received from the pension company regarding the tax:

"To provide you with a background, the Finance Act 2004 introduced restrictions on the payment of a child pension to children aged over 23. In summary, unless the pension was already in payment or the parent had died before 6 April 2006, pension payments to children must normally stop when they reach age 23. As your father died on XXX, after the Act came into effect, your benefit is subject to these restrictions.

However, the Trustees have agreed to pay your benefit until 31st July 2012, when your course ends. Therefore, from your 23rd birthday under Her Majesty’s Revenue & Customs (HMRC) rules, your benefit will be classed as an unauthorised payment and will be subject to a 40% tax charge. It will not be subject to income tax."

I carried on with my course till 2014, so i was still receiving a pension, which was still subject to a 40% tax charge.

From 2011-2014, i've been a full-time student in China, relying on that money to keep me in education. All i want to be sure about is that the tax was correct given my situation (not working, studying full-time abroad).

Thanks in advance

Seabee42

The payment of a child benefit past the age of 23 was deemed by legislation in 2004 to count as an unauthorised payment.

As such if they pay that benefit it has an unauthorised payment charge which they have to pay to HMRC. It is this 40% they are deducting from the payment to you.