Bmw pension - one off payment on death of a member

Hi all, I need a bit of clarification again :), hopefully you can help ......................
JLR and BMW both pay a 1 off lump sump £1500 to the family of members who pass away, this is to help with funeral costs .
12 years ago Dad passed away, the Trustees decided I should be awarded the money which all family members knew was used for funeral costs, as I recall there was NO INCOME TAX due.
Mom passed away in April this year , again the Trustees decided I should be awarded the £1500, however this time there is an Income tax implication which will result in me paying 40% tax !, I explained on the phone that they should award the money to one of my non tax paying sisters, I was told that the Trustees had made there decision and it could not be changed !
Today I have received A BMW payslip with the payment and tax deducted, it appears as if it will be an ongoing payment, which of course it is not.
So to the point, the girl I spoke to didnt seem to understand the purpose of this payment as she suggested my sisters may well get a payment themselves (err it doesnt work like that), I wonder is this "new tax" part of Mr Browns "Pensions tax changes"
Any help gratefully received as always


Replies

  • dunstonhdunstonh Forumite
    106.7K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭✭✭
    I wonder is this "new tax" part of Mr Browns "Pensions tax changes"

    Not it wasnt.  

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • edited 31 July 2020 at 10:59AM
    ThrugelmirThrugelmir Forumite
    82.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    edited 31 July 2020 at 10:59AM
    In years gone by the company could have settled the tax liability on such payments directly with the HMRC. Not paying the tax is obviously a cost saving. 
    Do you pay 40% tax on an annual basis? If not, over the coming months the overpaid amount will be reimbursed through your monthly pay. 
    It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." — George Soros
  • edited 31 July 2020 at 11:03AM
    moleratmolerat Forumite
    24.9K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    edited 31 July 2020 at 11:03AM
    The only factor here seems to be which side of 75 the person was at the time of death.  There may be more tax or a refund due depending on how the payment was actually taxed and OP's personal circumstances.
  • dunstonhdunstonh Forumite
    106.7K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭✭✭
    The only factor here seems to be which side of 75 the person was at the time of death.  

    A George Osborne change, just for reference

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jayjaysjayjays Forumite
    39 Posts
    Tenth Anniversary 10 Posts Combo Breaker
    Thanks dunston, got to ask ;)
    Thanks Thrug, no I earn as close as I can to the 40% threshold, I can ensure its only 20% but its still annoying that Trustees, rather than take the job as a break from work, actually understood the implication of their dictate and when its highlighted to them, they refuse to make a sensible decision in support of the members family.
    Hi Mole, thanks they were both over 75 so it sounds like maybe I paid tax 12 years ago and didnt notice. There will be more tax coming,  on this "payslip" there is £90 tax which assumes no more earnings and full £12500 allowance split 1/12
     
  • BrynsamBrynsam Forumite
    3.6K Posts
    Fifth Anniversary 1,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭
    jayjays said:
    Thanks dunston, got to ask ;)
    Thanks Thrug, no I earn as close as I can to the 40% threshold, I can ensure its only 20% but its still annoying that Trustees, rather than take the job as a break from work, actually understood the implication of their dictate and when its highlighted to them, they refuse to make a sensible decision in support of the members family.
    Hi Mole, thanks they were both over 75 so it sounds like maybe I paid tax 12 years ago and didnt notice. There will be more tax coming,  on this "payslip" there is £90 tax which assumes no more earnings and full £12500 allowance split 1/12
     
    I'd contact the pension scheme administrators in writing and ask them why, given that this payment has been made at the discretion of the trustees, tax is payable at all. If you'd be kind enough to come back and update this thread with the answer, that would be most interesting. 

    Normally the point of having trustees exercise discretion is to avoid tax, so it isn't clear to me why tax is payable at all. Nor is it clear to me why the trustees can't change their decision. I've certainly seen it done where new information comes to light and/or the proposed recipient then asks for some of the cash to be diverted to someone else.
  • jayjaysjayjays Forumite
    39 Posts
    Tenth Anniversary 10 Posts Combo Breaker
    Thanks Brynsam, I think I will, obviously I can make the libility 20% through a sipp or similar but I am annoyed that no consideration has been taken regarding the tax.
    I receive the "reduced" cash 1/8 so any change will have to be retrospective which could get messy especially dealing wih a taxman in his living room :( , I will fire the first salvo and see what occurs, thanks again.

Sign In or Register to comment.
Latest MSE News and Guides

Energy price cap could be extended beyond 2023

New plans have just been announced by the Government

MSE News

Cheap contents insurance for tenants

DON'T assume your landlord covers you

MSE Guides

Summer sizzlers round-up

Incl £2ish sun cream & £1.50 disposable BBQs

MSE Deals