"Informal arrangements" letter to HMRC - structure and contents query

bigandy2

I'm administering my late mother's estate. Everything was completed a week ago and I'm now ready to send an "informal arrangement" letter to HMRC to report the final figures. The estate meets the informal arrangements criteria.

I'm not clear what information this letter should provide, or its structure and any calculations. None of my probate guidance books, or even the HMRC website, provides any details about this letter. Perhaps I'm overthinking it.

The estate is simply capital from savings and investments, a few £thousand interest and £500 dividends paid since the death in late April '23, and the house sale (which sold for well-under the residence nil-rate band (RNRB) of £175k).

Do I simply send an informal letter to HMRC quoting those numbers and they'll crunch them and send any final demand/repayment of IHT/income tax, or do I have to do a tax calculation for them?

I've read an estate does not have a personal allowance, so I imagine the calculation would be;

= savings interest x basic rate of income tax.
+
dividend income x basic rate of dividend tax 

or is it (savings interest + dividend income) x basic rate of income tax?

The house sold at auction for £60k less than the RICS valuation. Do I need to declare any CGT loss, (although my affairs don't have any other investment gains to offset) ?

If anyone has a template letter that they've successfully used with HMRC, I'd appreciate a share. 

thanks in advance for any help. I'll be glad to have all this finally brought to a close.

jem16

bigandy2 said:

I'm administering my late mother's estate. Everything was completed a week ago and I'm now ready to send an "informal arrangement" letter to HMRC to report the final figures. The estate meets the informal arrangements criteria.

I'm not clear what information this letter should provide, or its structure and any calculations. None of my probate guidance books, or even the HMRC website, provides any details about this letter. Perhaps I'm overthinking it.

The estate is simply capital from savings and investments, a few £thousand interest and £500 dividends paid since the death in late April '23, and the house sale (which sold for well-under the residence nil-rate band (RNRB) of £175k).

Do I simply send an informal letter to HMRC quoting those numbers and they'll crunch them and send any final demand/repayment of IHT/income tax, or do I have to do a tax calculation for them?

I've read an estate does not have a personal allowance, so I imagine the calculation would be;

= savings interest x basic rate of income tax.
+
dividend income x basic rate of dividend tax 

or is it (savings interest + dividend income) x basic rate of income tax?

The house sold at auction for £60k less than the RICS valuation. Do I need to declare any CGT loss, (although my affairs don't have any other investment gains to offset) ?

If anyone has a template letter that they've successfully used with HMRC, I'd appreciate a share. 

thanks in advance for any help. I'll be glad to have all this finally brought to a close.

You don’t calculate the tax. You just report income from interest and dividends. You should also include the proceed from the house sale minus expenses for estate agent fees and conveyancing fees. As far as the house goes what matters is the Probate value. If the house sold for less then there’s no CGT to report. 

If you want to calculate it for yourself then interest is taxed at 20% and dividends at 8.75%.

All laid out here.

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