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Claim Tax back on pension

  • 11-06-2020 10:12pm
    #1
    danois
    Registered Users, Registered Users 2 Posts: 1,408 ✭✭✭


    Hi I am looking for some info on if any tax back can be claimed from a pension tax payment.

    My dad passed away and we found out he had money left in his pension. We went through probate and claimed back what money was left. There was a tax amount 30% taken at source before the pension funds were released. The guy in the pension office told us that it’s possible to claim some of this back in your end of year taxes. I am wondering if there is any truth to this as he didn’t seem to have any idea of how much or how to go about it. Just a vague notion it may be possible. He wasn’t very helpful at any stage in the process so I don’t know if I have much faith in what he’s told us.

    Many thanks.


Comments

  • #2
    coylemj
    Registered Users, Registered Users 2 Posts: 25,479 ✭✭✭✭coylemj


    Was your father already retired and drawing a private or occupational pension when he passed away?

    That guy in 'the pension office' - does he work for Revenue or a life company or your father's employer?


  • #3
    danois
    Registered Users, Registered Users 2 Posts: 1,408 ✭✭✭danois


    coylemj wrote: »
    Was your father already retired and drawing a private or occupational pension when he passed away?

    That guy in 'the pension office' - does he work for Revenue or a life company or your father's employer?

    Yeah he was retired and claiming private pension. He worked for a life company and he was next to useless in every way! Thanks


  • #4
    coylemj
    Registered Users, Registered Users 2 Posts: 25,479 ✭✭✭✭coylemj


    That money was probably an ARF (Approved Retirement Fund) your father had with the life company. When you retire, you can take a lump sum up to a certain threshold tax-free and rather than pay tax there and then on any excess cash, you can leave the rest of your fund in an ARF where it can accumulate tax-free but you pay tax (PAYE & USC) when you withdraw from it. If the owner dies before the fund is exhausted, the money goes to his estate.

    If, on the death of the owner, the money is being distributed to a child over the age of 21, then according to the document I've linked below, it is 'subject to an income tax charge under Case IV of Schedule D at the rate of 30% (which is a ring-fenced final liability tax).'

    As it's described as 'income tax' and the rate is 30% for everyone, I can't see that you can claim a refund. Capital acquisition tax (CAT) does not apply in the case of children above 21.

    Take a look at this Revenue document (last updated June 2020) on the topic, see section 11 on p.16. And note that a payment (real or implied) from an ARF is known (by Revenue) as a 'distribution', bear that in mind when you're reading any information on their website on the subject.

    https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-23.pdf


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