What tax is payable on a single life annuity that is paid after death
A relative of mine died earlier this year and although every company was contacted as soon as possible, there was obviously not enough time for some company processes as a couple of single life annuities were paid out in the month after death.
I had thought that these companies would write asking for the money to be paid back, but we've heard nothing after nearly 6 months, so I'm currently assuming that once the estate administration period has completed then these annuities will need to be added onto what is reported to the hmrc for a 'simple' estate, i.e. as per the "Reporting on ‘simple’ estates" section of https://www.gov.uk/probate-estate/reporting-the-estate .
However I'm not sure what income tax values would be put for the annuities. One was paid with 20% already paid, whilst the other was paid tax-free due to its tax code. I'm thinking that the details of both annuities should be added onto the letter, but put income tax of £0 for the one already taxed, and then put the second with the income tax of 20% of the payment.
Does that sound right?
Fortunately there is time to figure this out as it is likely to be many months away as we're still waiting for probate to be granted and then we're likely to have some problems when selling the house, but I would like to get this sorted whilst not under any time pressure.
p.s. the hmrc have told us that we do not need to do a tax return for my relative for the 2022-23 tax year, which is helpful, but I assume these two annuities would not have fallen into that anyway.
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