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Paying tax on dead partners private pension
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Tom_middle
Posts: 1 Newbie
in Cutting tax
My father passed away several years ago at age 49. He had a private police pension that now goes to my mum, however by taking this pension it pushes her into the 40% tax bracket. If my father were alive still then obviously the pension would go to him leaving my mum out of the higher tax bracket and he only would pay 20% on it —> more money.
My question is firstly, is this correct that my dad’s pension is added straight on top of my mums salary and incurs this higher tax. Secondly, is there anyway to gift the pension or split in in such a way that the tax is lowered?
Thanks
Tom
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Tom_middle wrote: »My question is firstly, is this correct that my dad’s pension is added straight on top of my mums salary and incurs this higher tax. ...
Yes. It's not your dad’s pension anymore, it's your mum's.Tom_middle wrote: »Secondly, is there anyway to gift the pension or split in in such a way that the tax is lowered?
Not that I'm aware of.0 -
the only options are can see would be to pay enough into her own pension to avoid the 40% band or donate it all to charity0
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If she's still earning, does she have to take all of it? Would it be possible to delay taking it until she retires herself?
The Pensions Board might have more suggestions.No longer a spouse, or trailing, but MSE won't allow me to change my username...0 -
The police dependants' trust are very helpful.I’m a Senior Forum Ambassador and I support the Forum Team on the Competition Time, Site Feedback and Marriage, Relationships and Families boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com All views are my own and not the official line of Money Saving Expert.0
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Tom_middle wrote: »My question is firstly, is this correct that my dad’s pension is added straight on top of my mums salary and incurs this higher tax.
It certainly is: income is income.Tom_middle wrote: »Secondly, is there anyway to gift the pension or split in in such a way that the tax is lowered?
Not that I've ever heard of. The usual way to dodge 40% tax would be for your mother to contribute enough to a pension that her earnings minus gross pension contribution falls below the higher rate threshold. What sort of pension does she pay in to at the moment?Free the dunston one next time too.0 -
Your mother is earning a salary.
Does she have a pension scheme?
Has she considered paying enough from her "relevant earnings" into her pension to avoid the 40% tax?
https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief0
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