Advice needed on paying hmrc after pension death benefit lump sum received

[InTheCludgie]

Hi my DF passed away last year and yesterday I received a lump sum of £42k from a death benefit connected to his pension. No tax was paid to HMRC prior to this due to my father's age and other conditions however I understand that I will need to pay them a large chunk as this counts as income. I called them yesterday to discuss and to ask if I could just give them a one-off payment however the man told me that they hadn't yet received notification of me receiving this so couldn't do anything at the present time.

I asked if there would be an option to just transfer, write a cheque or whatever it is I need to do but I felt he was being a bit evasive regards this and was talking about my tax code probably changing etc and would need to wait til an end of financial year letter is issued. I don't earn a great deal so if I were to pay this back from my wage each month it could potentially take years. Is there anyone in the know who can reassure me on this please? I would prefer to just give them the money and move on, not have it hanging over me until I am picking up my own pension!

I got 2 lump sums from my husbands pension and it wasn’t taxable
Also a death in service payment that I had to
engage financial advisors for. That wasnt taxable either
It depends what type of benefit it is. What type of pension. If tax is to be paid it’s usually taken by the pension provider before its paid out
Does this page make it any clearer? It didn’t for me!! I think you’ll get clearer answers from the pension provider.

www.gov.uk/tax-on-pension-death-benefits

How old was you DF op?

Youhedge he was 67

You may need to pay some tax on any interest accrued but usually there is no tax paid on an insurance scheme.

It’s tax free, even if it was proceeds of a pension it’s tax free due to his age. Sorry about you DF

unless there was something unusual about the setup of this pension this lump sum wouldn't be taxable. I have been a member of various pensions and every time the small print around the death benefit lump sum has been that the pension holder expresses a "preference" for who should receive the lump sum rather than there being an "obligation" precisely because if this was a contractual consequence of the scheme then it would be taxable, but because of how they word the paperwork the lump sum is actually treated as an ex gratis gift from the pension trustees to the beneficiary and therefore isn't taxable. every pension I have joined has this setup and I would be rather surprised if this one didn't.

I suspect HMRC were being evasive because they knew full well that this isn't likely to be taxable and if they facilitate you paying tax on it as income it's just going to create a bunch more work for them to sort out a refund.

Sorry, if i have misunderstood this thread but if you have received money following the death of your father then the only tax to consider is inheritance tax and this lumpsum will form part of his estate and no tax will be payable for the first £325000.

Regrets pensions dont usually count towards IHT. Sorry for your loss amaryl . Thanks everyone for the replies, just needed a clearer idea where I stood on income tax before I go investing it into my pension or mortgage then later regret it as I can't access the money to pay a tax bill.

Another vote for
pension death benefits are part of his estate and taxable only in as far as IHT applies to the estate
they are not YOUR income

PS
DC pension pots do not count towards the IHT estate
but DB lump sums do

DC pension pots do not count towards the IHT estate

That’s not always the case.