Additional income and benefits - Tax on a Widow's Pension


Most widows receive a widow's pension. Women widowed under sixty, and some widowed over that age, also get a lump sum of £1,000 called widow's payment. The widow's pension is taxable, but the widow's payment is not. The income you obtain from the pension uses up a lot of your tax allowances. So the income you can have on top of the basic widow's pension before you pay tax is fairly limited, especially after the end of the tax year in which your husband died.

In the first tax year, the amount you can get on top of your pension before you pay tax depends on the month in which your husband died.

After his death, you receive the whole annual tax allowance, however close it is to the end of the tax year on 9 April. So if your husband dies close to the end of the tax year say, in February or March - you qualify for a whole year's tax allowance to cover just a few weeks' income. It is likely, therefore, that you will not need to pay any tax at all yourself in that tax year.

However, if he dies early in the tax year - say, in late April or May - you will get the same tax allowance over almost a whole year. So the earlier in the tax year that your husband dies, the less income you will be able to have on top of your pension before you start to pay tax.

If your husband dies right at the start of the tax year, you will be able to have only about £67.60 a week on top of your pension before you start paying tax if you are under sixty-five. If you are over sixty-five, you will be able to have more income on top of your benefit, about £88.66 on top of your pension before you start paying tax. But if your husband dies later in the tax year, you will be able to have much more than these amounts.


More information

Additional income and benefits - Widows and the tax man


In the second year the position is a bit simpler. If you are under sixty-five, you will be able to have 67.6 a week on top of your pension without paying tax. If you are aged sixty-five or over, the figure is 88.66 assuming that you do not get widow's allowance.
After the second tax year, you will just get a single person's tax allowance. You will then be able to have 8.99 on top of your basic pension if you are under sixty-five and 80 if you are aged sixty-five or more. Table 9 summarizes the position.
Remember that each amount is the average over the year on top of the basic widow's benefits.
Because your widow's benefits take up most of your tax allowances, if you . . . ... see: Additional income and benefits - Widows and the tax man