Executors account

mazzy

Can anyone tell me if money held in an executors account that is making interest is liable to tax or is it taxed at sorce.

We need to know whether to hold back any money after it is divided up to pay income tax.

Alfie_E

Interest on an executors’ account is deemed to be income earned by the residuary beneficiaries. That is those who get a share of whatever is left of the estate once debts have been settled and any specific gifts have been given out. This interest must be taxed at source at the normal tax rate for interest, whether or not any beneficiaries are non-tax payers. When beneficiaries get their share of the residue, at the end of any tax year or when you finish the administration, you complete R185s for them. If the beneficiary is a non-taxpayer they may then reclaim tax paid. If they are a higher-rate taxpayer, they will need the information for any tax return.

jonnyw_2

mazzy wrote: »

Can anyone tell me if money held in an executors account that is making interest is liable to tax or is it taxed at sorce.

We need to know whether to hold back any money after it is divided up to pay income tax.

Ours at HSBC pays gross. I think they all should do the same.

Remember theres no personal allowance for an estate and its all taxed at flat basic rate. So you can just multiply the total interest by basic rate to calculate the tax.
Then you leave the tax in the executors account and get a tax form.

I think there may be a way of treating the income as part of the benificiaries income as an alternative to the estates. Im not sure exactly how this works. It may be worth looking into if theres a lot of interest and some of the benificiaries are non tax payers.