Springfords LLP blog

Some news, views and comments about everything and anything, relevant and irreverent.

Death In Service, Taxed Afterwards

10 April 2017

Making work your entire life is not necessarily how Springfords recommend you spend all your days, but if an unfortunate accident at work cuts short your mortal coil , a few precautions could mean your loved ones don’t see their inheritance grimly reaped by the exchequer.

Dearly beloved, we are gathered here, to pass on the worldly remains of our dear colleague, and make sure lots of pennies intended for their family goes to the taxman. Not the eulogy you were expecting, but the one your grieving relatives may hear, if you pop your clogs while on the company clock, and you don’t act now.

Elgar’s Nimrod, Dylan’s Knockin’ on Heaven’s Door, or even Terry Jack’s Seasons in the Sun. These might be on your intended playlist, but for the taxman, an unexpected death while still covered by the company’s death in service scheme could be music to the ears.

Now, we’re not suggesting anything spiritual on your deathbed, you understand. We’re quite the most secular of professionals here at Springfords. Our devotion is to accountancy, tax and making sure your affairs are all neatly tied up, long before that ultimate deadline comes round. Anyway, your deathbed is way too late to start planning for the afterlife - especially if it’s a matter of tax.

If you want to meet your maker, and make sure your loved ones aren’t left behind short changed, you need to do a spot of planning for the inevitable, long before it becomes inescapable.

When it comes to death-in-service benefits, we turn to our favourite morning read, The Financial Times, which recently spotted a situation, where the untimely demise of a loved one - be it the shock of the latest sales figures, or a misadventurous drowning in the water cooler - can leave the bereaved with a hefty tax bill, just to add to the grief. Even the diligent can get caught out by a loophole that works in favour of the taxman. If you don’t watch out, you’ll be well on your way to doing your ‘ashes to ashes, dust to dust’, long before the situation develops, and there’s not a lot you can do from six feet under.

In this tax grab from beyond the grave, from beyond someone else’s grave actually, any lump sum death in service benefit that counts as a payment into a pension scheme could push the whole pension urn - sorry, pension pot - over the lifetime allowance threshold, and your loved ones’ unexpected tax demand won’t even come with a respectful black edging.

If you want to avoid any unintended heartache, a financial headache, and the Treasury spiriting away a lot of the benefits you - well, died for - we have a cheery motto for you here at Springfords: "It's never too early to talk about death".

So, while you’re still singing a hap-hap-happy tune, and their’s a spring in your step rather than a death march, whistle your way down to Springfords, and have a word about your death-in-service benefits. After that, you can confidently programme the remembrance service juke box to blast out a chorus of “Walking on Sunshine.”

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springfords blog

Some news, views and comments about everything and anything, relevant and irreverent.

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