Taxed after death?

toozie_2

I am looking for some tax advice please?

My friend's husband was recently killed in an accident. At the time of his death he had been fully empolyed, in a job he'd been in for 30+ years.
My friend has just had another payslip from his company (she's already received a payout & her first months pension) the latest payment is for a bonus he earnt by keeping to a deadline at work in September-which I understand has to be taxed. But the rest of the pay is all the holidays that he was due to take before the end of his holiday year.
Should tax have been taken for the holiday pay, for a deceased person?

My friend, his wife is not a tax payer, she's a SAHM.

Thank you, if anyone can be of help. Otherwise I will suggest we ring the tax office next week.

Murdina

The employer is paying out arrears of pay which the husband would have got one way or another eventually. Tax is due on these as it would have been were he still alive - assuming that the amounts paid are amounts to which he was contractually entitled at the time he died.

If you look here it explains the rules but in quite technical terms:

http://www.hmrc.gov.uk/manuals/eimanual/EIM42390.htm

If the employer is paying anything just out of the goodness of their heart ie there was no expectation of it and it is just a goodwill gesture to the widow then this would be tax free. Her best bet would be to ask the employer if he would have been paid these amounts eg if he had left.

Be very wary of any response you get from HMRC as it is unlikely the person you speak to will ask all the right questions to give the right answer - this can be quite a complicated area.

Suggest you or the widow have a read of this link also:

http://www.hmrc.gov.uk/incometax/claim-for-deceased.htm

Mikeyorks

It looks as though the employer is merely paying out sums due, unfortunately, to the date of death. The holiday pay has been crystallised by that event ... and tax correctly charged on the Code number in force - if a P45 has not yet been issued. If one has been issued - then Code 'BR' should have been used.

But bear in mind that there are unused allowances up to April 2011 ......... and that will likely generate a refund to the personal representative idc.

chrismac1

As Mark Twain once said - "There are only 2 certainties in life - death & taxes!"

Pennywise

Doesn't matter what, if any, tax was deducted from the payroll. You'll have to do a tax return which will almost certainly produce a tax refund as the deceased gets a full personal allowance in year of death which won't have been fully used on wages to date anyway. Ultimately the effect will be the same whether tax was deducted at basic rate or 647L or no tax at all - it all comes out in the wash in the final tax return.