Joint life annuity and death before 75

Kevin35

Hi, I  am looking for some advice, my 80 year old mother was contacted by her pension provider in April advising her that as my father died on January 8th 2015 and he was 74 that the joint life annuity she receives should be tax free giving her a lump sum equivalent to the tax for last tax year, HMRC wrote asking for the tax and giving her until January 2021 to pay it we have been trying to find more details, the pension provider gave her a statement saying it was tax free but continued to deduct the monthly tax,they have since written to advise that it now not tax free, does anyone know the tax rules around this as it changed in Apr 2015 ?

Brynsam

From April 2015:

• If the scheme member died under age 75, payments to the beneficiary would be tax-free, if they were from a drawdown account, uncrystallised funds, or from an annuity set up after April 2015

Your father had set up his annuity before April 2015 so even though he was under 75, payments to his widow are (sadly) taxable.

More info: https://commonslibrary.parliament.uk/research-briefings/cbp-7318/