Tax bill following spouse's death
Discussion
Dad died Easter Sunday 2017. We informed his company pension provider and the relevent government agencies over the following couple of weeks, dad's state pension was stopped and mum's state pension was increased, dad's company pension was reduced to a widow's pension.
Mum is now receiving a total of £14k p.a., and she has been paying tax on this income since April. She didn't pay any tax during 2017/18.
She has just received a tax bill for 2017/18, just under £500, to be collected by reducing her personal allowance.
Just wondering if this is correct - tax payable from the beginning of the tax year in which a spouse died?
Mum is now receiving a total of £14k p.a., and she has been paying tax on this income since April. She didn't pay any tax during 2017/18.
She has just received a tax bill for 2017/18, just under £500, to be collected by reducing her personal allowance.
Just wondering if this is correct - tax payable from the beginning of the tax year in which a spouse died?
"The standard Personal Allowance from 6 April 2017 to 5 April 2018 was £11,500."
https://www.gov.uk/income-tax-rates/previous-tax-y...
Assuming she had less income than £11500 before, and now with with widows pension taking here over that, she will owe tax on anything over £11,500 from when the widows pension kicked in, probably the date of death. But income is taken over the whole year, not a month by month basis.
14000 - 11500 = 2500 taxable income
tax rate 20%
2500 x .2 = £500
https://www.gov.uk/income-tax-rates/previous-tax-y...
Assuming she had less income than £11500 before, and now with with widows pension taking here over that, she will owe tax on anything over £11,500 from when the widows pension kicked in, probably the date of death. But income is taken over the whole year, not a month by month basis.
14000 - 11500 = 2500 taxable income
tax rate 20%
2500 x .2 = £500
Edited by was8v on Saturday 30th June 08:36
OK, thanks. I wasn't sure if tax would be payable from the date of death, or from the start of the next tax year.
Obviously mum is liable for tax on about £2500 of her current income, and this is now being deducted at source by the company pension provider.
It just seems odd that neither the state nor company pension providers deducted any tax at source during the last tax year (despite being informed of the death), and HMRC have backdated their calculations to the beginning of the year during which dad died. It's only 10 days worth of tax - he died on 16th April, tax demand goes back to 6th April - so not really worth the hassle of arguing the case over £15.
Obviously mum is liable for tax on about £2500 of her current income, and this is now being deducted at source by the company pension provider.
It just seems odd that neither the state nor company pension providers deducted any tax at source during the last tax year (despite being informed of the death), and HMRC have backdated their calculations to the beginning of the year during which dad died. It's only 10 days worth of tax - he died on 16th April, tax demand goes back to 6th April - so not really worth the hassle of arguing the case over £15.
clockworks said:
OK, thanks. I wasn't sure if tax would be payable from the date of death, or from the start of the next tax year.
Obviously mum is liable for tax on about £2500 of her current income, and this is now being deducted at source by the company pension provider.
It just seems odd that neither the state nor company pension providers deducted any tax at source during the last tax year (despite being informed of the death), and HMRC have backdated their calculations to the beginning of the year during which dad died. It's only 10 days worth of tax - he died on 16th April, tax demand goes back to 6th April - so not really worth the hassle of arguing the case over £15.
It's not up to state or private pension providers to do this - they only act on what HMRC tell them to do and I don't know that HMRC can pick up that change once into a tax year. You're supposed to flag it up to HMRC yourself.Obviously mum is liable for tax on about £2500 of her current income, and this is now being deducted at source by the company pension provider.
It just seems odd that neither the state nor company pension providers deducted any tax at source during the last tax year (despite being informed of the death), and HMRC have backdated their calculations to the beginning of the year during which dad died. It's only 10 days worth of tax - he died on 16th April, tax demand goes back to 6th April - so not really worth the hassle of arguing the case over £15.
The precise date doesn't matter - it's how much you receive in the tax year.
Has your mum done a benefits assessment? Her total income is pretty marginal.
Sheepshanks said:
It's not up to state or private pension providers to do this - they only act on what HMRC tell them to do and I don't know that HMRC can pick up that change once into a tax year. You're supposed to flag it up to HMRC yourself.
The precise date doesn't matter - it's how much you receive in the tax year.
Has your mum done a benefits assessment? Her total income is pretty marginal.
We registered the death on the government gateway, which should in theory pass the information to all government departments.The precise date doesn't matter - it's how much you receive in the tax year.
Has your mum done a benefits assessment? Her total income is pretty marginal.
clockworks said:
We registered the death on the government gateway, which should in theory pass the information to all government departments.
Sure, and Eric may know more about this, but I doubt HMRC would connect that to your Mum, and her income change probably wasn't enough to trigger any action (I have no idea if they are supposed to pick up income changes during the tax year, I tend to think not).What HMRC expects to happen is that everyone monitors their tax affairs - so they expect your Mum would notice she should have been paying tax, she would contact them, and they would make adjustments.
There a recent thread from a guy unhappy with a 3 grand tax bill that has occurred because he's suddenly earned over £100K and at that level your personal allowance disappears. He thinks it's either his employers fault or HMRCs, but of course HMRC wouldn't know his income was going jump up and his employer just does what HMRC tell them.
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