Please help - higher rate tax on will inheritence, panicking

Bobby1_3

Probably not the right place for this thread, but I am at my wits end.

Just had the final tiny installment through of the money I received (£5k in total) on my grandma's will.

However, along with the cheque, the letter says:

'Tax has been deducted at the ordinary rate. If you pay the higher tax rate then you will need to arrange to pay the additional tax on your income you have received from the estate.'

I just fall into the higher tax bracket. I have also just used to the money from the will to buy my first house and am literally flat-broke. Does this mean I am liable to pay 40% on everything I have received? (ie an additional 18% on top of the tax they have already deducted?)

Really panicking about this, the statement of income they have sent is gibberish to me, and I have no idea if I now have to give back around £1000 of cash from the will that I have already spent months ago! Really panicking as I just don't have the cash and was never warned about this in advance

ANY advice really appreciated.

dzug

Bobby1 wrote: »

Probably not the right place for this thread, but I am at my wits end.

Just had the final tiny installment through of the money I received (£5k in total) on my grandma's will.

However, along with the cheque, the letter says:

'Tax has been deducted at the ordinary rate. If you pay the higher tax rate then you will need to arrange to pay the additional tax on your income you have received from the estate.'

I just fall into the higher tax bracket. I have also just used to the money from the will to buy my first house and am literally flat-broke. Does this mean I am liable to pay 40% on everything I have received? (ie an additional 18% on top of the tax they have already deducted?)

Really panicking about this, the statement of income they have sent is gibberish to me, and I have no idea if I now have to give back around £1000 of cash from the will that I have already spent months ago! Really panicking as I just don't have the cash and was never warned about this in advance

ANY advice really appreciated.

No. You will only have to pay the extra 18% on that part of the money that

a takes you over the higher rate tax threshold
and
b is interest, etc - ie income

You won't have to pay any tax on the capital part of the bequest.

Don't worry about not having the cash now or having to find it in a hurry - the taxman will be quite happy to take it through PAYE from your salary. The year after next in fact if you include it in this year's tax return. Maybe next year if you are overprompt in telling him about it. He won't charge interest.

Not sure that anyone should have warned you about this - it's up to you to know your personal tax situation.

CLAPTON

can you explain a little more about the situation.

if this is simply an inheritance from your granma's will then all the inheritance tax ought to have been paid before the money was distributed by the executors and you should have no personal liability.
however, there may be income tax liability on the interest accrued by the estate from the time of death to the time of distribution but this would usually be relatively small.

Murdina

It will just be higher rate tax on any interest on the funds whilst in the estate as said above. The solicitor should have given you a form showing the amounts of net and gross and the tax witheld so you know what needs to go on your sa return if you do one (there are special pages for it called trusts which are brown tabbed and you fill in section about half way down). Ask him for it if he has not done so. You might add how much his letter has worried you, since it would appear he has failed to make the situation very clear.