Interest / Tax - Prudential Bond payment after death

Funkyfreddy
Funkyfreddy Posts: 375 Forumite
Part of the Furniture 100 Posts Combo Breaker

Howdo,

Just before I make some calls to HMRC....

My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

Thanks in advance.


Comments

  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,070 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    edited 7 April at 5:55PM

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    The way you have described it suggests the interest payment was income received during the period of administration.

    In which case basic rate tax deduction would be correct.
  • poseidon1
    poseidon1 Posts: 1,046 Forumite
    1,000 Posts First Anniversary Name Dropper

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    No, it is estate administration income accruing and received after death so tax thereon non recoverable.

    However did Prudential issue a chargeable event certificate for any bond gains realised at death?

    If so, those bond 'income gains' may well be reportable on your mother's final tax return. There will be no income tax repayable  ( bond gains deemed to be net of 20% income tax), but potentially higher rate income tax depending on the quantum of gain and your mother's other income sources in year of death.
  • Funkyfreddy
    Funkyfreddy Posts: 375 Forumite
    Part of the Furniture 100 Posts Combo Breaker

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    The way you have described it suggests the interest payment was income received during the period of administration.

    In which case basic rate tax deduction would be correct.
    Thanks D&C - yes that would seem to be the case that the interest accrued was during administration until Probate was granted and the claim completed.

    So the Income Tax @ BR on interest accrued is not recoverable by "anybody" as it were ?

    Thanks.
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,070 Forumite
    10,000 Posts Fifth Anniversary Name Dropper

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    The way you have described it suggests the interest payment was income received during the period of administration.

    In which case basic rate tax deduction would be correct.
    Thanks D&C - yes that would seem to be the case that the interest accrued was during administration until Probate was granted and the claim completed.

    So the Income Tax @ BR on interest accrued is not recoverable by "anybody" as it were ?

    Thanks.
    This might be worth a read.  I don't think there is anything for you (or anyone else) to report or claim back as far as that interest payment is concerned.

    https://www.litrg.org.uk/tax-nic/trusts-and-estates/bereavement-tax-issues-death/tax-income-and-gains-after-death
  • Funkyfreddy
    Funkyfreddy Posts: 375 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    poseidon1 said:

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    No, it is estate administration income accruing and received after death so tax thereon non recoverable.

    However did Prudential issue a chargeable event certificate for any bond gains realised at death?

    If so, those bond 'income gains' may well be reportable on your mother's final tax return. There will be no income tax repayable  ( bond gains deemed to be net of 20% income tax), but potentially higher rate income tax depending on the quantum of gain and your mother's other income sources in year of death.

    Thanks Poseidon,

    There was chargeable event certificate with a figure of "Notional tax" due at the BR.
  • poseidon1
    poseidon1 Posts: 1,046 Forumite
    1,000 Posts First Anniversary Name Dropper
    poseidon1 said:

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    No, it is estate administration income accruing and received after death so tax thereon non recoverable.

    However did Prudential issue a chargeable event certificate for any bond gains realised at death?

    If so, those bond 'income gains' may well be reportable on your mother's final tax return. There will be no income tax repayable  ( bond gains deemed to be net of 20% income tax), but potentially higher rate income tax depending on the quantum of gain and your mother's other income sources in year of death.

    Thanks Poseidon,

    There was chargeable event certificate with a figure of "Notional tax" due at the BR.
    Did you do  anything about the gain as far as your mother's final tax return is concerned ( the gain is reportable).

    The certificate should have indicated the possibility of an  income tax liabilty at 40% subject to top slicing relief mitigation. The article below explains the position -

    https://techzone.abrdn.com/public/iht-est-plan/dealing-investments-after-death#:~:text=Death of the last life assured&text=The gain is taxed in,used for chargeable event purposes.
  • Funkyfreddy
    Funkyfreddy Posts: 375 Forumite
    Part of the Furniture 100 Posts Combo Breaker

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    The way you have described it suggests the interest payment was income received during the period of administration.

    In which case basic rate tax deduction would be correct.
    Thanks D&C - yes that would seem to be the case that the interest accrued was during administration until Probate was granted and the claim completed.

    So the Income Tax @ BR on interest accrued is not recoverable by "anybody" as it were ?

    Thanks.
    This might be worth a read.  I don't think there is anything for you (or anyone else) to report or claim back as far as that interest payment is concerned.

    https://www.litrg.org.uk/tax-nic/trusts-and-estates/bereavement-tax-issues-death/tax-income-and-gains-after-death
    Thanks again D&C - it might seem that the interest accrued, and tax paid needs reporting to HMRC as being received during the administration period as a "Simple" estate by way of a letter rather than the need of an actual SA return looking at the criteria in the link below.

    I'd expect there may be some additional interest during the administration period from another Aviva Bond I'm waiting on being settled along with a Cash Savings account will be some interest from another savings.

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


  • Funkyfreddy
    Funkyfreddy Posts: 375 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    poseidon1 said:
    poseidon1 said:

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    No, it is estate administration income accruing and received after death so tax thereon non recoverable.

    However did Prudential issue a chargeable event certificate for any bond gains realised at death?

    If so, those bond 'income gains' may well be reportable on your mother's final tax return. There will be no income tax repayable  ( bond gains deemed to be net of 20% income tax), but potentially higher rate income tax depending on the quantum of gain and your mother's other income sources in year of death.

    Thanks Poseidon,

    There was chargeable event certificate with a figure of "Notional tax" due at the BR.
    Did you do  anything about the gain as far as your mother's final tax return is concerned ( the gain is reportable).

    The certificate should have indicated the possibility of an  income tax liabilty at 40% subject to top slicing relief mitigation. The article below explains the position -

    https://techzone.abrdn.com/public/iht-est-plan/dealing-investments-after-death#:~:text=Death of the last life assured&text=The gain is taxed in,used for chargeable event purposes.
    poseidon1 said:
    poseidon1 said:

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    No, it is estate administration income accruing and received after death so tax thereon non recoverable.

    However did Prudential issue a chargeable event certificate for any bond gains realised at death?

    If so, those bond 'income gains' may well be reportable on your mother's final tax return. There will be no income tax repayable  ( bond gains deemed to be net of 20% income tax), but potentially higher rate income tax depending on the quantum of gain and your mother's other income sources in year of death.

    Thanks Poseidon,

    There was chargeable event certificate with a figure of "Notional tax" due at the BR.
    Did you do  anything about the gain as far as your mother's final tax return is concerned ( the gain is reportable).

    The certificate should have indicated the possibility of an  income tax liabilty at 40% subject to top slicing relief mitigation. The article below explains the position -

    https://techzone.abrdn.com/public/iht-est-plan/dealing-investments-after-death#:~:text=Death of the last life assured&text=The gain is taxed in,used for chargeable event purposes.

    Thanks again P.

    I haven't as yet - the Chargeable Event for the Bond was last year, correspondence relating to the Bond being paid was dated the 1st April - both 2024/25 Tax Year with the funds received on the current 2025/26 Tax Year. It was a substantial gain over 30+ years.

    Mum had a another Bond with Aviva which has yet to be paid but again there was a Chargeable Event when she passed- gin was over close to 30 years.

    I need to get my head around Top Slicing relief by the look of it but the thought is now in my head that value of the Bonds, including the gain were reported to HMRC for IHT / Probate


  • poseidon1
    poseidon1 Posts: 1,046 Forumite
    1,000 Posts First Anniversary Name Dropper
    poseidon1 said:
    poseidon1 said:

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    No, it is estate administration income accruing and received after death so tax thereon non recoverable.

    However did Prudential issue a chargeable event certificate for any bond gains realised at death?

    If so, those bond 'income gains' may well be reportable on your mother's final tax return. There will be no income tax repayable  ( bond gains deemed to be net of 20% income tax), but potentially higher rate income tax depending on the quantum of gain and your mother's other income sources in year of death.

    Thanks Poseidon,

    There was chargeable event certificate with a figure of "Notional tax" due at the BR.
    Did you do  anything about the gain as far as your mother's final tax return is concerned ( the gain is reportable).

    The certificate should have indicated the possibility of an  income tax liabilty at 40% subject to top slicing relief mitigation. The article below explains the position -

    https://techzone.abrdn.com/public/iht-est-plan/dealing-investments-after-death#:~:text=Death of the last life assured&text=The gain is taxed in,used for chargeable event purposes.
    poseidon1 said:
    poseidon1 said:

    Howdo,

    Just before I make some calls to HMRC....

    My Mum who passed away last year had a Bond with Prudential and with Probate granted a claim was made for this to be paid.

    In addition to the value given when my Mum passed there has been an Interest payment added to the payment made to the Executors with Income Tax at the Basic Rate deducted by Prudential.to reflect the period the claim was outstanding.

    Does the Interest received and Income Tax paid fall within my Mum's Personal Allowance for the 2024/25 Tax Year so potentially a repayment of the Income Tax deducted or does it fall elsewhere ?

    Thanks in advance.


    No, it is estate administration income accruing and received after death so tax thereon non recoverable.

    However did Prudential issue a chargeable event certificate for any bond gains realised at death?

    If so, those bond 'income gains' may well be reportable on your mother's final tax return. There will be no income tax repayable  ( bond gains deemed to be net of 20% income tax), but potentially higher rate income tax depending on the quantum of gain and your mother's other income sources in year of death.

    Thanks Poseidon,

    There was chargeable event certificate with a figure of "Notional tax" due at the BR.
    Did you do  anything about the gain as far as your mother's final tax return is concerned ( the gain is reportable).

    The certificate should have indicated the possibility of an  income tax liabilty at 40% subject to top slicing relief mitigation. The article below explains the position -

    https://techzone.abrdn.com/public/iht-est-plan/dealing-investments-after-death#:~:text=Death of the last life assured&text=The gain is taxed in,used for chargeable event purposes.

    Thanks again P.

    I haven't as yet - the Chargeable Event for the Bond was last year, correspondence relating to the Bond being paid was dated the 1st April - both 2024/25 Tax Year with the funds received on the current 2025/26 Tax Year. It was a substantial gain over 30+ years.

    Mum had a another Bond with Aviva which has yet to be paid but again there was a Chargeable Event when she passed- gin was over close to 30 years.

    I need to get my head around Top Slicing relief by the look of it but the thought is now in my head that value of the Bonds, including the gain were reported to HMRC for IHT / Probate


    You may find short a discussion  on the HMRC community forum  ( link below ) on chargeable event reporting, helpful in the circumstance you will need to address. In your case two different chargeable events may indeed introduce further complexity.

    https://community.hmrc.gov.uk/customerforums/pt/7636cf79-d75b-ef11-a4e5-6045bd0ddbf9

    Worth noting that if there was an IHT liability arising on your mother's death, and an income tax liability emerges by reference to the bond gains, this should be a debt at death upon which IHT relief can be claimed.
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