Bmw pension - one off payment on death of a member

jayjays

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

dunstonh

I wonder is this "new tax" part of Mr Browns "Pensions tax changes"

Not it wasnt.  

Thrugelmir

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. 

molerat

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.

dunstonh

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

jayjays

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
 

Brynsam

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.

jayjays

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.