Benefits, Tax and Pension After Death of a Partner

Introduction

When your spouse or civil partner dies, your financial situation often changes significantly. You may receive additional income from inheritances, pensions or benefits, or your income may fall. It's important to understand what you need to report to HMRC, how your tax allowances may change, and what benefits and pension entitlements you can claim.

Changes to Your Tax Position

After your partner's death, your income will likely change. You might receive extra money from pensions, annuities, benefits or an inheritance, which could mean paying more tax. Alternatively, you may find yourself on a lower income and paying less tax than before.

Your tax allowances — the amount of income you can receive before paying tax — may also change depending on your new circumstances.

Income You Must Report to HMRC

You need to tell HMRC if you start receiving:

• Interest from banks, building societies or National Savings and Investment products (such as pensioner income or capital bonds)
• Income from letting out property
• Income from Purchased Life Annuities
• Widowed Parent's Allowance or Bereavement Allowance
• Carer's Allowance
• Foreign pension payments
• Any other income that should have been taxed but hasn't been

Income You Don't Need to Report

You don't need to inform HMRC about:

• Income your employer pays through PAYE
• Private pension income
• Tax-free income, such as from an Individual Savings Account (ISA)
• Any income if you'll reach State Pension age within four months
• Jobseeker's Allowance, Incapacity Benefit, Employment and Support Allowance, or Bereavement Support Payment

To report changes to your income, either include the information in your next Self Assessment tax return (if you're registered), or contact HMRC by phone.

How Your Tax Allowances Change

If you pay Income Tax, you have a Personal Allowance — the amount you can earn before paying tax. This allowance may change if your income changes, and HMRC will automatically adjust it when you tell them about your new circumstances.

Married Couple's Allowance

If you or your partner were born before 6 April 1935, you may have been claiming Married Couple's Allowance. You'll continue to receive this allowance until the end of the current tax year (5 April), but HMRC will automatically stop it after that. You'll then receive only your Personal Allowance.

Blind Person's Allowance

If your husband, wife or civil partner was claiming Blind Person's Allowance, you can ask HMRC to transfer any unused amount of their allowance for the current tax year (up to 5 April) to you. Contact HMRC's Blind Person's Allowance enquiries line on 0300 200 3301 (Monday to Friday, 8am to 8pm; Saturday, 8am to 4pm).

National Insurance Considerations

If you're a widow and married before April 1977, you might be paying a reduced rate of National Insurance (sometimes called the 'small stamp'). You may be able to continue paying this reduced rate — contact HMRC to find out what you should do.

Benefits You Can Claim

After your partner's death, you'll need to make new claims for some benefits they were claiming for your family. You may also qualify for additional benefits to help with bereavement or if you're now on a lower income.

Bereavement Benefits

You may be able to claim:

• Funeral Expenses Payment — helps towards funeral costs if you're on a low income
• Bereavement Support Payment — available if your husband, wife or civil partner died in the last 21 months, or if your partner you were living with as though married died after 6 April 2017
• Widowed Parent's Allowance — available if your partner died before 6 April 2017 and you have at least one dependent child

Contact the DWP Bereavement Service on 0800 151 2012 (Monday to Friday, 8am to 6pm) to check your eligibility for bereavement benefits and whether the death affects any other benefits you're already claiming.

Child Benefit

If your partner was the named claimant for Child Benefit, you'll need to make a new claim in your own name.

Benefits for Lower Income

If your income has fallen following your partner's death, you may qualify for additional support. Use a benefits calculator to work out what you can claim. You may also be able to apply for:

• Winter Fuel Payment — if you were born on or before 5 July 1952
• Cold Weather Payment — if you're on a low income
• Warm Home Discount Scheme

Be aware that you may have to pay Income Tax on some benefits you receive.

Pension Entitlements

You may be entitled to extra pension payments from your partner's pension or based on their National Insurance contributions.

State Pension

You must be over State Pension age to claim extra payments from your partner's State Pension. What you can claim depends on whether you reached State Pension age before or after 6 April 2016. Contact the Pension Service to check your entitlements.

If you reached State Pension age before 6 April 2016: You'll receive any State Pension based on your partner's National Insurance contributions when you claim your own pension. However, you won't receive this if you remarry or form a new civil partnership before reaching State Pension age.

If you reached State Pension age on or after 6 April 2016: You'll receive the new State Pension and may be able to inherit an extra payment on top of your own pension.

Private Pensions

You may receive payments from your partner's workplace, personal or stakeholder pension scheme, depending on the scheme rules. Contact the pension scheme directly to find out what you're entitled to. If the pension provider doesn't pay tax on these payments for you, you'll need to pay tax on them yourself.

War Widow's or Widower's Pension

You may qualify for a War Widow's or Widower's Pension if your partner died as a result of their service in the Armed Forces or because of a war.

Sources

• Your benefits, tax and pension after the death of a partner

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.