Inheritance, and child tax credit renewal

getmore4less

Ongoing starts from date of death.

System

From R185

If the beneficiary was in receipt of income from a UK estate

They are not getting an income from the estate, they will eventually get a bequest as per the will

The estate is gathering owed moneys. and will then pay out as a bequest. The estate was owed the dividend not the beneficiary

As said before, unless it is explicit in a will that A gets the dividends from the estates shares then there is no proof that A actually received the dividends.

THE BENEFICIARY DOES NOT GET THE DIVIDEND OR AN INCOME. THEY GET A BEQUEST FROM REALISED ASSETS OF THE DECEASED

Savvy_Sue

FreeBear wrote: »

Interest paid on ISA savings are tax free. On death, the ISA should have been closed and the funds transferred to a deposit account by the bank.

Yes, that is what happened.

FreeBear wrote: »

As I understand it, the original question from one of the beneficiaries was 'I’m trying to complete our Child Tax Credits renewal form..." - The inheritance, when paid to the beneficiary, would need to be declared as “Income from trusts, settlements and estates”. This would (normally) be tax free and would be regarded as capital when calculating benefits.

I don't think capital / savings are assessed with Child Tax Credits, at least the enquirer said not. However, apart from this dividends / interest question, I'm fairly clear that the actual bequests do NOT have to be declared as part of our taxable income.

FreeBear wrote: »

Does the beneficiary in question also claim other benefits such as housing & council tax relief ?
If so, the council (and DWP if applicable) will also need to be informed when he/she has received the money.

No, no other means-tested benefits - well, Child Benefit is partly means-tested but they're definitely still entitled to that.

My co-executor is listing all the post-death interest and dividends etc. We'll run it past the accountant we used previously for some general advice.

Savvy_Sue

Ah, another question ...

Premium bond prizes received after death: £100 total. Do they go in the same 'pot' as the dividends?

getmore4less

Savvy_Sue wrote: »

Ah, another question ...

Premium bond prizes received after death: £100 total. Do they go in the same 'pot' as the dividends?

They(any won after DOD up to a year) are also treated at income but remain tax free so don't need to be declared for tax purposes.

I would treat them the same as PB winning of a person claiming tax credits

zagfles

Note that there is a disregard in tax credits for the first £300 of "other income" (stuff like investment income, interest, income from estates etc), so if the person claiming tax credits has less than £300 total including any of their own interest, dividends etc plus that from the estate they don't need to declare it.

https://www.gov.uk/tax-credits-working-out-income

Savvy_Sue

zagfles wrote: »

Note that there is a disregard in tax credits for the first £300 of "other income" (stuff like investment income, interest, income from estates etc), so if the person claiming tax credits has less than £300 total including any of their own interest, dividends etc plus that from the estate they don't need to declare it.

https://www.gov.uk/tax-credits-working-out-income

I think they're aware of that, and they're close to the £300, which is why we need to be a bit more precise.

Savvy_Sue

Hopefully, my final question ...

The sums involved are not large: for last tax year it's a total of £57 each.

However I'm struggling where to put the dividends on the R185.

There's box 18: Dividend income - after tax taken off. This includes dividends from foreign companies that do not qualify for UK tax credit.

And there's box 21: Dividend income taxed at non-payable dividend rate - after tax taken off. This includes dividends from UK companies and dividends from foreign companies that qualify for UK tax credit.

DH says box 18 is for foreign shares, and 21 for UK shares. Is he right?

getmore4less

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/420057/sa107-notes-2015.pdf

This should help it explains what the recipient does with the data on the r185.

Box 21 Dividend income taxed at non-payable
dividend rate
This includes dividends from UK companies
with a 10% tax credit and dividends from foreign
companies that qualify for UK tax credit.
Use the figure in box 21 on your R185
(Estate Income) and put this in box 21

Savvy_Sue

So looks as if 'my' dividends go into 21. Thanks.