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30 January 2012

Will my husband have to pay 40% of his lump sum from his Police Pension in tax?

My husband retired from the Police force after 30 years service at the age of 51. He took his pension and a tax free lump sum and returned to work for the same Police Authority in a civilian role. He has now been told there is a possibility that he may have to pay 40% tax on his lump sum and also 40% tax on any future earnings. Apparently this is due to changes in tax laws in the 2010 Finance Act. My husband has paid into his pension for 30 years in the belief that his lump sum would be tax free and neither he nor the Police Authority who employed him had any idea of this tax change. As you can imagine this situation is extremely stressful, is causing marital discord and other problems for my husband and I and also other ex-police officers affected. Does anyone have any knowledge of these changes? It would seem that wherever we look we cannot get the answers we are looking for.

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