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How do I file a tax-free lump sum pension payment I inherited and paid 33% IHT?

  • 01-11-2023 1:17pm
    #1
    Twofeet
    Registered Users, Registered Users 2 Posts: 20 ✭


    Can someone please help me understand my tax obligations in the following scenario?

    I inherited a 5-year mandatory pension of €147,000 from my partner in 2018 and paid an inheritance tax of 33% but did not draw down the pension until August 2023 (owing to a dispute). The pension had accumulated in value by €3000 when it was paid. I have an annual pension of €21,228 which is paid via PAYE. I have no other income. These are the questions I have:

    1. Do I need to declare the €150,000 as income in my PAYE annual return, or declare only the €3000 accumulated between 2018 and 2023? And what tax is owed?
    2. What additional taxes (if any) am I liable for, besides the IHT 33% I have already paid on the lump of €147,000?
    3. Can I declare this myself in PAYE in 'MyAccounts'?
    4. Is there a way to reduce my tax liability?
    5. Any suggestions on what investments I should consider to improve the current pension I'm earning? I'm 70 y.o. so would prefer a low-risk option.




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