Tax due on interest accrued on a deceased person's savings account

sneedshelp

Thanks very much to everyone, things have now moved on because I think this is all to do with interest on savings being above the threshold.

poseidon1

sneedshelp said:

Thanks very much to everyone, things have now moved on because I think this is all to do with interest on savings being above the threshold.

Do you mean above the the estate £500 ( entirely tax free)  threshold or the personal £1000 (0% tax)  threshold?

Two entirely different things but if above the £500  ( estate threshold ) the net effect on you (as sole beneficiary)  should largely be tax neutral as previously advised.

However again see below Runner_Duck's reference to simple estate's reporting and  how the estate £500 tax free income threshold works (as well to note it also applies to estate dividends) -

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

sneedshelp

Thanks.
If I am understanding it right ( I might not be ), if interest earned on savings is above £10000, HMRC ask for self assessment.
This is possibly happening for the first time, having inherited Mum's savings last year.
I think they cannot tax it all via tax codes on my pension ?

poseidon1

sneedshelp said:

Thanks.
If I am understanding it right ( I might not be ), if interest earned on savings is above £10000, HMRC ask for self assessment.
This is possibly happening for the first time, having inherited Mum's savings last year.
I think they cannot tax it all via tax codes on my pension ?

Assuming you have completed the administration of your mother's estate early in the 2024/25 tax year, and her assets are now all in your name, then yes self assessment may now be in point where your personal annual savings interest exceed the £10k threshold.

 What was the effective date you gave HMRC in 2024/25 for the completion of the estate administration period?  From that date onwards interest income is wholly attributable to you for the purposes of the £10k threshold.

If you don't want to find yourself permanently submitting annual tax returns, perhaps you should look into to seeing how you can shelter your taxable income going forward, using options such as ISAs, premium bonds, low coupon government gilts, pensions etc. Lots of tips on the relevant MSE Savings and Pensions forums.

Finally, I notice from another post you made in the Cutting tax forum , that you have neither a mobile phone or home computer.

Since you clearly know how to use one,  can I strongly recommend you invest in a home computer ASAP and maybe a mobile phone, unless of course there are reasons you have not done so already?

Conducting your personal financial affairs in a public library is less than ideal and making an investment in home technology would be highly beneficial for you in  the future conduct of your personal and financial affairs. Sounds like you inherited more than enough for this to be financially viable.