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JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 10099
Experience:  30 years as a practising solicitor.
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Hi, A close friend of mine has a severely handicapped son

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Hi,

A close friend of mine has a severely handicapped son (both mentally and physically). IN addition his wife has just been medically retired after having had a brain tumour. Both my mate and his wife are in their late thirties, their son is 4.
She is to receive a pension from her employer, (although how much is unclear) and the question he is asking me is:

What is the limit on income that we can receive from the carers allowance and pension before it becomes taxable? Would it be better to take a lump sum from the pension or just take the maximum monthly income available.

I hope that makes sense, but please do ask for more clarity if you need it.

Many thanks and regards

Malcolm Desira
Thank you for your question.

The personal allowance for an individual is presently £9440 so you pay tax on income above that and both a pension and carers allowance are taxable.

I presume your friend works and that the wife will be in receipt of these incomes, therefore the husband and not wife wil get the married couples allowance.

Here is the HMRC page for you to read:

http://www.hmrc.gov.uk/incometax/intro-tax-allow.htm

I hope this helps. Please leave a positive response so that I am credited for my time.
Customer: replied 3 years ago.


Thanks for the reply. Just one more point if I may? From the tax point of view would it make more sense to take a lump sum from the pension now or just take monthly income from day 1? i.e. is a lump sum allowed in these circumstances and if it is, is it tax free?


 


Many thanks and regards

If the pension allows for a lump sum it would generally be tax free. That would reduce the income, possibly to below the threshold. Your friend would have to get the pension illustration from the employer.
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