Deceased self assessment questions

lancunian

Hi,
In November 2022, a relative passed away and left a valid will with a solicitor as the executor.
The relative had three properties, one was their main residence, one had a tenant and the other was empty.
The executors continued with the rental income untill the property went on the market in July/August 2023, when the tenants left.
Probate was granted in September 2023.
I am dealing with the solicitors on behalf of a relative who is a beneficiary.
I was informed by the solicitors that HMRC advised that they have a backlog and it was possible that they may be unable to deal with the self assessment until August 1st 2024.
I said that I found this unacceptable and I agreed with the solicitor that I would contact HMRC as I registered the death and used the "Tell us once" service.
When I contacted HMRC, they advised that they had been contacted in March 2024 by the solicitors.
They also agreed to send the forms out to the solicitors and look out for their return.
My question is, in these circumstances do you have to wait until the end of the tax year before filing for self assessment or could it have been done when the income from the property rental had been calculated last year.
Thanks

JGB1955

AIUI a tax return would have been needed to be submitted for the deceased from 6 April 22 to November 22.  The executors would then have had to submit a return for the 'estate in administration' from Nov 22 to Apr 23 and Apr 23 to Apr 24.  A further return will be needed for income accruing from Apr 24 until final distribution of funds.  

That's  my understanding anyway......!

lancunian

JGB1955 said:

AIUI a tax return would have been needed to be submitted for the deceased from 6 April 22 to November 22.  The executors would then have had to submit a return for the 'estate in administration' from Nov 22 to Apr 23 and Apr 23 to Apr 24.  A further return will be needed for income accruing from Apr 24 until final distribution of funds.  

That's  my understanding anyway......!

Yes, thanks.
I believe a tax return has been submitted for 22/23, (I hope)
I'm looking to find out the earliest a tax return can be submitted in these circumstances.

mybestattempt

JGB1955 said:

AIUI a tax return would have been needed to be submitted for the deceased from 6 April 22 to November 22.  The executors would then have had to submit a return for the 'estate in administration' from Nov 22 to Apr 23 and Apr 23 to Apr 24.  A further return will be needed for income accruing from Apr 24 until final distribution of funds.  

That's  my understanding anyway......!

You're correct :

https://www.gov.uk/probate-estate/reporting-the-estate

Dazed_and_C0nfused

lancunian said:

JGB1955 said:

AIUI a tax return would have been needed to be submitted for the deceased from 6 April 22 to November 22.  The executors would then have had to submit a return for the 'estate in administration' from Nov 22 to Apr 23 and Apr 23 to Apr 24.  A further return will be needed for income accruing from Apr 24 until final distribution of funds.  

That's  my understanding anyway......!

Yes, thanks.
I believe a tax return has been submitted for 22/23, (I hope)
I'm looking to find out the earliest a tax return can be submitted in these circumstances.

Which return though?

For the deceased person?

Or for the post death income?

Marcon

lancunian said:

Probate was granted in September 2023.
I am dealing with the solicitors on behalf of a relative who is a beneficiary.
I was informed by the solicitors that HMRC advised that they have a backlog and it was possible that they may be unable to deal with the self assessment until August 1st 2024.
I said that I found this unacceptable and I agreed with the solicitor that I would contact HMRC as I registered the death and used the "Tell us once" service.
When I contacted HMRC, they advised that they had been contacted in March 2024 by the solicitors.
They also agreed to send the forms out to the solicitors and look out for their return.

Why is a delay of a few months 'unacceptable' (whatever that meaningless word means)?

Whether or not you find it 'acceptable' won't, I'm afraid, alter HMRC's ability to deal with this any more speedily if they have a backlog. There is no reason why this case should have priority over others - would you think it fair to have your application delayed just because someone else shouted louder? 

poseidon1

lancunian said:

Hi,
In November 2022, a relative passed away and left a valid will with a solicitor as the executor.
The relative had three properties, one was their main residence, one had a tenant and the other was empty.
The executors continued with the rental income untill the property went on the market in July/August 2023, when the tenants left.
Probate was granted in September 2023.
I am dealing with the solicitors on behalf of a relative who is a beneficiary.
I was informed by the solicitors that HMRC advised that they have a backlog and it was possible that they may be unable to deal with the self assessment until August 1st 2024.
I said that I found this unacceptable and I agreed with the solicitor that I would contact HMRC as I registered the death and used the "Tell us once" service.
When I contacted HMRC, they advised that they had been contacted in March 2024 by the solicitors.
They also agreed to send the forms out to the solicitors and look out for their return.
My question is, in these circumstances do you have to wait until the end of the tax year before filing for self assessment or could it have been done when the income from the property rental had been calculated last year.
Thanks

No you do not have to wait, and as long as the estate has had a UTR number accorded to it ( assume this is the case due to submission of the previous year's estate return) the executors can now :

* Complete an estate tax return for  the  2023/24  tax year.
* Settle the tax due at the same.

It may well be the case that HMRC take their own sweet time to process the return, but the tax paid should be properly applied to the self assessment account once received. It may sit on the account as an allocated credit, but that's HMRC's problem not yours,

Going a stage further, if you are very close to finalising the estate in the current tax year, nothing prevents the executors in submitting an informal tax return in letter form  ( or manually altering a paper 2023/24 return ) , reporting any taxable income and gains, enclosing a cheque in settlement for any self assessed taxes thereon and requesting formal tax clearances from HMRC, sooner rather than later.

The executors should  not be unreasonably delayed in completing the estate administration as quickly as possible, however your firm of solicitors assisting in this aspect of the estate's tax compliance may also be an issue here - in my experience  estate tax and accounting tends to be the strong point of appropriately qualified accountancy practices rather than the average law firm.

lancunian

Dazed_and_C0nfused said:

lancunian said:

JGB1955 said:

AIUI a tax return would have been needed to be submitted for the deceased from 6 April 22 to November 22.  The executors would then have had to submit a return for the 'estate in administration' from Nov 22 to Apr 23 and Apr 23 to Apr 24.  A further return will be needed for income accruing from Apr 24 until final distribution of funds.  

That's  my understanding anyway......!

Yes, thanks.
I believe a tax return has been submitted for 22/23, (I hope)
I'm looking to find out the earliest a tax return can be submitted in these circumstances.

Which return though?

For the deceased person?

Or for the post death income?

Both.

Marcon said:

lancunian said:

Probate was granted in September 2023.
I am dealing with the solicitors on behalf of a relative who is a beneficiary.
I was informed by the solicitors that HMRC advised that they have a backlog and it was possible that they may be unable to deal with the self assessment until August 1st 2024.
I said that I found this unacceptable and I agreed with the solicitor that I would contact HMRC as I registered the death and used the "Tell us once" service.
When I contacted HMRC, they advised that they had been contacted in March 2024 by the solicitors.
They also agreed to send the forms out to the solicitors and look out for their return.

Why is a delay of a few months 'unacceptable' (whatever that meaningless word means)?

Whether or not you find it 'acceptable' won't, I'm afraid, alter HMRC's ability to deal with this any more speedily if they have a backlog. There is no reason why this case should have priority over others - would you think it fair to have your application delayed just because someone else shouted louder? 

As noted by others on this board, the wait for things like probate and bereavement support used to be a lot shorter, but that is for another thread.poseidon1 said:

lancunian said:

Hi,
In November 2022, a relative passed away and left a valid will with a solicitor as the executor.
The relative had three properties, one was their main residence, one had a tenant and the other was empty.
The executors continued with the rental income untill the property went on the market in July/August 2023, when the tenants left.
Probate was granted in September 2023.
I am dealing with the solicitors on behalf of a relative who is a beneficiary.
I was informed by the solicitors that HMRC advised that they have a backlog and it was possible that they may be unable to deal with the self assessment until August 1st 2024.
I said that I found this unacceptable and I agreed with the solicitor that I would contact HMRC as I registered the death and used the "Tell us once" service.
When I contacted HMRC, they advised that they had been contacted in March 2024 by the solicitors.
They also agreed to send the forms out to the solicitors and look out for their return.
My question is, in these circumstances do you have to wait until the end of the tax year before filing for self assessment or could it have been done when the income from the property rental had been calculated last year.
Thanks

No you do not have to wait, and as long as the estate has had a UTR number accorded to it ( assume this is the case due to submission of the previous year's estate return) the executors can now :

* Complete an estate tax return for  the  2023/24  tax year.
* Settle the tax due at the same.

It may well be the case that HMRC take their own sweet time to process the return, but the tax paid should be properly applied to the self assessment account once received. It may sit on the account as an allocated credit, but that's HMRC's problem not yours,

Going a stage further, if you are very close to finalising the estate in the current tax year, nothing prevents the executors in submitting an informal tax return in letter form  ( or manually altering a paper 2023/24 return ) , reporting any taxable income and gains, enclosing a cheque in settlement for any self assessed taxes thereon and requesting formal tax clearances from HMRC, sooner rather than later.

The executors should  not be unreasonably delayed in completing the estate administration as quickly as possible, however your firm of solicitors assisting in this aspect of the estate's tax compliance may also be an issue here - in my experience  estate tax and accounting tends to be the strong point of appropriately qualified accountancy practices rather than the average law firm.

Thanks.
My basic question was if the executors have to wait until the main residence (the last property sold)
completed before filing tax returns (last few weeks),  or if they could've done it after the competition of the sale of the rental property (last year).

poseidon1

lancunian said:

Dazed_and_C0nfused said:

lancunian said:

JGB1955 said:

AIUI a tax return would have been needed to be submitted for the deceased from 6 April 22 to November 22.  The executors would then have had to submit a return for the 'estate in administration' from Nov 22 to Apr 23 and Apr 23 to Apr 24.  A further return will be needed for income accruing from Apr 24 until final distribution of funds.  

That's  my understanding anyway......!

Yes, thanks.
I believe a tax return has been submitted for 22/23, (I hope)
I'm looking to find out the earliest a tax return can be submitted in these circumstances.

Which return though?

For the deceased person?

Or for the post death income?

Both.

Marcon said:

lancunian said:

Probate was granted in September 2023.
I am dealing with the solicitors on behalf of a relative who is a beneficiary.
I was informed by the solicitors that HMRC advised that they have a backlog and it was possible that they may be unable to deal with the self assessment until August 1st 2024.
I said that I found this unacceptable and I agreed with the solicitor that I would contact HMRC as I registered the death and used the "Tell us once" service.
When I contacted HMRC, they advised that they had been contacted in March 2024 by the solicitors.
They also agreed to send the forms out to the solicitors and look out for their return.

Why is a delay of a few months 'unacceptable' (whatever that meaningless word means)?

Whether or not you find it 'acceptable' won't, I'm afraid, alter HMRC's ability to deal with this any more speedily if they have a backlog. There is no reason why this case should have priority over others - would you think it fair to have your application delayed just because someone else shouted louder? 

As noted by others on this board, the wait for things like probate and bereavement support used to be a lot shorter, but that is for another thread.poseidon1 said:

lancunian said:

Hi,
In November 2022, a relative passed away and left a valid will with a solicitor as the executor.
The relative had three properties, one was their main residence, one had a tenant and the other was empty.
The executors continued with the rental income untill the property went on the market in July/August 2023, when the tenants left.
Probate was granted in September 2023.
I am dealing with the solicitors on behalf of a relative who is a beneficiary.
I was informed by the solicitors that HMRC advised that they have a backlog and it was possible that they may be unable to deal with the self assessment until August 1st 2024.
I said that I found this unacceptable and I agreed with the solicitor that I would contact HMRC as I registered the death and used the "Tell us once" service.
When I contacted HMRC, they advised that they had been contacted in March 2024 by the solicitors.
They also agreed to send the forms out to the solicitors and look out for their return.
My question is, in these circumstances do you have to wait until the end of the tax year before filing for self assessment or could it have been done when the income from the property rental had been calculated last year.
Thanks

No you do not have to wait, and as long as the estate has had a UTR number accorded to it ( assume this is the case due to submission of the previous year's estate return) the executors can now :

* Complete an estate tax return for  the  2023/24  tax year.
* Settle the tax due at the same.

It may well be the case that HMRC take their own sweet time to process the return, but the tax paid should be properly applied to the self assessment account once received. It may sit on the account as an allocated credit, but that's HMRC's problem not yours,

Going a stage further, if you are very close to finalising the estate in the current tax year, nothing prevents the executors in submitting an informal tax return in letter form  ( or manually altering a paper 2023/24 return ) , reporting any taxable income and gains, enclosing a cheque in settlement for any self assessed taxes thereon and requesting formal tax clearances from HMRC, sooner rather than later.

The executors should  not be unreasonably delayed in completing the estate administration as quickly as possible, however your firm of solicitors assisting in this aspect of the estate's tax compliance may also be an issue here - in my experience  estate tax and accounting tends to be the strong point of appropriately qualified accountancy practices rather than the average law firm.

Thanks.
My basic question was if the executors have to wait until the main residence (the last property sold)
completed before filing tax returns (last few weeks),  or if they could've done it after the competition of the sale of the rental property (last year).

Clearly, vacating the tenanted property in summer 2023  would not have marked the cessation of estate administration matters or the generation of other taxable events that could lead to additional tax liabilities after the sale and during the remaining tax year. 

 Yes rent would have ceased, but what about potential capital gains tax on eventual sale proceeds on both the rental and main residence properties ( it is unlikely the properties would have sold for exactly the amount of the probate valuation)? Indeed, once proceeds received what about taxable bank interest earned on the proceeds? Rents would not have been the only source of estate income for the remaining tax year.

It cannot make sense, or in any way acceptable to  HMRC to report estate taxable events on a piecemeal basis  in the midst of a tax year. 

You also state, this question arose as a result of your handling fiscal matters on behalf of a beneficiary of the estate. I cannot see how it would have advanced the beneficiary's tax reporting responsibilities by accelerating submission of  the executors'  2023/24 tax return in summer 2023. Surely the beneficiary would not be submitting their own tax return until 6 April 2024 at the earliest?

sheramber

How can the estate's tax postion be settled before all the properties are sold?

Apart from anything else, thre will be income for the sale and  selling costs.

lancunian

Thanks for the replies.
Appreciated