Who collects LTA charge?

mightbedave

I have just inherited a share of a SIPP. The deceased was under 75 so there is no tax to pay on the income but I am pretty certain that the deceased had exceeded their LTA by about 100k. My question is who collects the LTA tax charge? I assumed the pension company would do it before distributing the funds to the beneficiaries but they have not. Will each beneficiary have to pay a fraction of the tax due? Or are the executors responsible, which wouldn’t seem right with pensions falling outside of the estate?

mightbedave

Think I’ve found the answer myself at https://www.gov.uk/tax-on-pension-death-benefits

You pay tax once on the total amount you get from the pot - HM Revenue and Customs (HMRC) will bill you for it. They do this after they’re told about the payment by the person dealing with the estate of the person who died.

The person dealing with the estate must tell HMRC within 13 months of the death or 30 days after they realise you owe tax (whichever is later).

zagfles

Note that you can avoid any LTA charge by waiting 2 years at the expense of paying income tax - see this article which explains it quite well and especially the case study at the end.

https://www.investcentre.co.uk/sites/default/files/AJBIC_Death_Benefit_Rules.pdf

mightbedave

zagfles wrote: »

Note that you can avoid any LTA charge by waiting 2 years at the expense of paying income tax - see this article which explains it quite well and especially the case study at the end.

https://www.investcentre.co.uk/sites/default/files/AJBIC_Death_Benefit_Rules.pdf

Thanks that's really useful