HMRC demand re estate of deceased

Manxman_in_exile

Hi


My wife is executor of her mother's estate (mother died April 2018).


My wife has received a demand for payment of underpaid income tax up to date of mother's death.


Wife has asked me to look at her mum's accounts and the HMRC underpayment calculation.


Is there a calculator on the HMRC website where I can plug the figures in and check the calculation? (I know there was something there a couple of years ago when I successfully claimed a refund for myself, but I seem to be too stupid to find it again now!).


I've not actually looked at any of the figures yet, but from what I understand there shouldn't be much difficulty. Only income is a widow's pension; a small occupational pension; state pension; and interest earned from several bank accounts (my wife has, or has asked for, certificates of interest earned). Not aware of anything that can be deducted (although she was in a care home for the last three years or so before her death - she was in her mid 80s).


Is there anything non-obvious I should look out for? (I assume it's also worth checking she's not overpaid tax!)


PS - She may have been a higher rate taxpayer - the widow's pension was pretty high.


EDIT: Inheritance tax is not an issue.

BoGoF

TBH the calculation itself is unlikely to be incorrect. What may be wrong is the interest figures (unless you supplied them).

When was the date of death? Normally a repayment of tax would be due if someone dies before the year end if PAYE correct.

Manxman_in_exile

BoGoF wrote: »

TBH the calculation itself is unlikely to be incorrect. What may be wrong is the interest figures (unless you supplied them).

When was the date of death? Normally a repayment of tax would be due if someone dies before the year end if PAYE correct.

Yes. What I want to check is the interest earned figures they're using* - we haven't supplied them. I got a tax refund for my wife a few years ago (about £3k refund) because HMRC had simply estimated interest earned from earlier years. (she'd moved money out of savings accounts and interest rates had fallen).


Sorry - don't follow bit about PAYE? Only income was from three pensions (one state) and bank interest. I haven't actually looked at any of the figures yet. should tax be deducted at source from the pensions?


* If the interest figures HMRC have used are wrong, I want to recalculate the tax position


EDIT: For completeness, there may be four pensions. 1 x UK OAP; 1 x her own UK occ pension; 1 x UK widow's occ pension; 1 x widow's occ pension from when my FiL was a police officer in the "colonial service" (but so far AIUI, this one is paid by some arm of the UK govt.).

Manxman_in_exile

BoGoF- (doesn't sound right as an appellation!) - point taken about the calculation, but when I calculated my wife's tax refund I discovered HMRC had been treating Gift Aid wrongly for several years. They'd been adding it back into her tax instead of taking it off. How could that happen?


(Suppose I need to check Gift Aid as well.)


Died just after start of 18/19 tax year

xylophone

Tax bands for 2017-18 here

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

What was her total non savings income?

What was her total savings income?

What was her personal allowance?

She should have P60s for all pensions except the state pension (she should have had a letter March 2017 giving the rate for the year but for HMRC purposes you should calculate what she received in the tax year).

Your wife has all the statements of interest for the year in question.

Useful fact sheet can be downloaded here

https://www.litrg.org.uk/tax-guides/other-tax-issues/savings-and-tax

BoGoF

Manxman_in_exile wrote: »

BoGoF- (doesn't sound right as an appellation!) - point taken about the calculation, but when I calculated my wife's tax refund I discovered HMRC had been treating Gift Aid wrongly for several years. They'd been adding it back into her tax instead of taking it off. How could that happen?


(Suppose I need to check Gift Aid as well.)

Depends if your wife was a taxpayer or not. If not then a non taxpayer is required to pay tax if they make Gift Aid payments to charity.

We digress. Sounds like you need to gather all your late MIL's pension details and tax paid alongwith interest details before you can test the accuracy of any calculation.

Manxman_in_exile

Is this what I was looking for in my OP?


http://stccalculator.hmrc.gov.uk/UserDetails.aspx

getmore4less

Why did the executor not check the previous years and year of DOD taxes it is part of the job that needs doing as part of the probate application?

Manxman_in_exile

getmore4less wrote: »

Why did the executor not check the previous years and year of DOD taxes it is part of the job that needs doing as part of the probate application?

I don't know if she did or didn't. She was very surprised to get the letter from HMRC as as far as she was concerned the tax was sorted. I've been asked to check to make sure nothing's been overlooked.

Ms_Chocaholic

What is the amount that HMRC are stating is owed?
Did your mother in law have a will?
If so, who were the beneficiaries.

Manxman_in_exile

Ok - I'm just looking at the letter from HMRC (PA302)


Page 2 shows a full tax calculation for 2017/18 and gives a "You owe HMRC £300", for example.


Page 3 gives an "Explanation" (?). It says:


"Tax from Earlier Year - This calculation includes tax you owe HMRC for an earlier year. We have shown this in the Adjustments section on your calculation." (There is no section called "Adjustments" in the calculation, and no reference anywhere to any amounts owing from earlier years).


"Untaxed Interest
Untaxed Interest you paid tax on £1000 (say)
Your actual amount of Untaxed Interest £300 (say)

Your actual interest was LESS (my emphasis) than the estimated amount you paid tax on."


So why are they asking for unpaid tax of £300 - or am I being thick? (The figure of "£300" in the "Explanation" happens to be the same as the amount of Untaxed Interest in the calculation - I'm assuming that is unlikely to be a coincidence, but I don't see the connection(?))


I haven't checked the calculation yet - I've just checked the Explanation first (seemed sensible) and thought it makes no sense.


What am I missing?


EDIT: HMRC also can't spell my wife's surname correctly (its the same as her mother's) despite being instructed to correct it over a year ago!