Tax on lump sum

pippinpom

My father died May last year he had a pension with Prudential which they eventually paid out to her in Nov. The lump sum was £18,600 but she only received £15000 due to tax. If there any way she is entitled to any of this back? She also received a ppi payout from Gladstone Brooks and they deducted £739 in tax so she paid out over £4000 in tax . I know nothing about any of this just a family member said she might be able to claim it back . Excuse my ignorance on the matter.

Thanks for any help

pippinpom

Sorry that should say paid out to my mother 🤭

ElephantBoy57

pippinpom said:

The lump sum was £18,600 but she only received £15000 due to tax. If there any way she is entitled to any of this back? She also received a ppi payout from Gladstone Brooks and they deducted £739 in tax so she paid out over £4000 in tax . I know nothing about any of this just a family member said she might be able to claim it back .

It will be taxed as income, so it depends what other income there is.

When I got my pension lump sum there was a form that I filled in to get tax back before the end of the tax year. Maybe there is a form that can be filled in?

pippinpom

Yes that’s what I was wondering

xylophone

https://blog.moneysavingexpert.com/2019/04/martin-lewis--had-a-ppi-payout---if-so-you-can-reclaim-the-tax-o/

The pension has been taxed as income at basic rate.

What other income has your mother received in the tax year?

What is her tax code?

garmeg

pippinpom said:

My father died May last year he had a pension with Prudential which they eventually paid out to her in Nov. The lump sum was £18,600 but she only received £15000 due to tax. If there any way she is entitled to any of this back? She also received a ppi payout from Gladstone Brooks and they deducted £739 in tax so she paid out over £4000 in tax . I know nothing about any of this just a family member said she might be able to claim it back . Excuse my ignorance on the matter.

Thanks for any help

Was your father under 75 when he died?

dunstonh

If you father was under the age of 75 at date of death then it should be paid out tax free (other options are available).  If he was over 75 at date of death it is taxable if the beneficiary takes it as a lump sum.  If retained as a pension, only the amounts drawn are subject to taxation.   And taxation is based on the income of the beneficiary at the time of the withdrawal.

pippinpom

He was exactly 75 when he died, it was his prudential work pension

dunstonh

He was exactly 75 when he died

In which case, if your mum chose to withdraw the lump sum, then it would be treated as income and added to her income and taxed at the appropriate rate.   It is possible an emergency/month 1 tax code was used that could result in more tax deducted.  If so, she can notify HMRC now or she can wait until they identify it in a few years time.
If she had the money transferred to her pension, then it would not have been taxed.

pippinpom

Thanks for your help