Tax question post death and pre probate

Inadilemma

Hi, My mum passed away last year (November) and still in the process of getting everything sorted, probate was granted in June and solicitors are still doing ‘stuff’. Since November I’ve been receiving rents from a shop and house of which I’ve been simply placing in a savings account, I was under the impression that these fall under my own earnings and taxed as such at 40% or whatever my rate is. However reading a post earlier someone mentioned about them falling under the estate and taxed at 20%....is anyone able to confirm and advise when it falls under myself? I am both the executor and sole beneficiary.

Thanks

Tom99

Until the beneficial interest in the shop/house transfers to you then the estate, as a separate tax entity, pays 20% tax. The estate does not have a annual allowance for income tax.
However I am not sure what happens when the estate passes this income to as a beneficiary, maybe you have to declare it as income but with 20% tax already deducted.

getmore4less

What did the will say it can make a difference.

Inadilemma

getmore4less wrote: »

What did the will say it can make a difference.

It doesn’t mention anything relating to that specifically. Just that beneficiary is X etc

Linton

Tom99 wrote: »

Until the beneficial interest in the shop/house transfers to you then the estate, as a separate tax entity, pays 20% tax. The estate does not have a annual allowance for income tax.
However I am not sure what happens when the estate passes this income to as a beneficiary, maybe you have to declare it as income but with 20% tax already deducted.

Doesnt the income become part of the estate to be distributed according to the will?

Tom99

Linton wrote: »

Doesn't the income become part of the estate to be distributed according to the will?

Yes but the estate must pay tax on that income at 20% before distributing it. It must then be treated as income paid to the beneficiary but with a 20% tax credit.

getmore4less

Depends on the will some assets the beneficial interest transfer DOD.

Marcon

Beautifully clear explanation here: https://www.litrg.org.uk/tax-guides/bereavement/how-estate-taxed-during-administration

Inadilemma

Marcon wrote: »

Beautifully clear explanation here: https://www.litrg.org.uk/tax-guides/bereavement/how-estate-taxed-during-administration

Great stuff.....thanks very much :T