Tax on savings after death

movingon

I'm a bit confused. I am Executor for Dad's estate. He had a private pension and state pension, which obviously all stopped after date of death. He had some savings which were paid net, with tax deducted at source, as his total income prior to death, was above the personal allowance tax threshold. I have completed R27 with details of interest earned on the savings and income until date of death, and am waiting to hear back from HMRC. There was no IHT liability.


The bank has since paid out on three accounts and closed them. I have been sent new tax certs from them, for the period from date of death until closure. Do I need to contact HMRC and give them these figures, or is there another form to complete? I don't understand why this interest was taxed at source after death. Can anyone explain please?


I have looked on the HMRC website and feel I am going round in circles


In addition, one account has been left open for two more years as there is a bonus on maturity and it was suggested that this would be a good idea. This also pays monthly interest with tax deducted at source. This is being repaid into the account


I am the only beneficiary and the bank are aware of this. I am a non tax payer. What, if anything, should I be doing here vis a vis tax?


Thank you

getmore4less

You will need to do a return for the period of administration.

http://www.hmrc.gov.uk/trusts/basic_faqs_list_adminp.htm

All r85 and ISA stop at DOD and all interest is taxed at source.

This admin return can be done as a simple letter with all income and tax deduction tabulated and if HMRC want more they will ask(probably a trust return).
(In our case we got refund for overpaid tax and a demand for underpaid for before/after DOD and different tax years with a simple letter).

If you distribute the funds to yourself then any tax adjustments can be made for your tax status through your return(the estate issues a tax credit)

It would be simpler if the bank holding the final account could transfer that to your name so you can close off the estate accounts in this tax year.

movingon

Thank you. The bank will not transfer the account to me.
So, do you think I should write to them now with details of the closed accounts and then again with details of the open account at the end of the tax year, or wait until the end of the tax year and write with everything for this year, and then again at the end of the second year/


And is it Cardiff I need to write to .


I appreciate your input.

Crabapple

The income after death has been taxed at source because an estate does not have an Income Tax allowance, unlike an individual. So there is no tax free amount that it can earn before tax is due. Everything will be charged at lower rate.

The normal way to deal with the post-death income is for the estate to issue tax certificates to the beneficiaries stating what has been deducted. Those individuals then need to either pay additional tax if they are higher rate taxpayers, or can reclaim if they are non taxpayers like you.

(For practical purposes if there aren't higher rate or non taxpayers then often the certificates will only be issued on request).

As the sole beneficiary you might just be able to use the certificates as issued by the banks but you would need to check that point with them. You should report your own situation to whichever tax office you normally get correspondence from.