Yet more tax?

It is important to bear in mind that, in addition to finalising the income tax affairs of someone who may have died in terms of their lifetime liabilities, the personal representatives of an estate must also be aware that they will be responsible for dealing with any income tax and capital gains tax  liabilities that may arise during the administration of an estate.

Possibly involve an accountant

If the estate is anything other than “simple” then normally, it would be sensible to involve an accountant (preferably one that the person who has passed away has used during their lifetime) to prepare a suitable return or returns.

Informal reporting

For many estates, the Revenue will allow personal representatives to deal with matters informally. This means that the Revenue can be contacted in writing and details given at the end of the administration period of any income received. HMRC would then normally supply a reference number and using their standard bank details (available online) the tax can then be paid.

If an estate receives bank of interest of £500 or less as the only income during the administration period, the Revenue do not expect to hear from the personal representatives, and a reporting of estate income is therefore not necessary in such circumstances.

Capital gains tax

Any liability for capital gains tax (i.e. tax on selling assets of an estate at a profit) must be declared to the Revenue if the personal representatives’ allowances are exceeded in the relevant tax year.