Estate taxation

Perdusys1955

We've finally received the Letters of Administration allowing us to complete my SIL's estate. The house has been sold, and we are in the process of sorting out her Self Assessment for Apr 2025 to the date of her death in January this year. As she had a rental property, there are also forms to fill in for Estate taxation, as the tenancy continued until July this year.

I have registered the estate and received a UTR for it. We intend to do the account as cash basis, her rental management agents kept the rent due in house until we received probate in August. She also has a small amount of cash in an interest bearing account, which has yet to be paid to the estate account. Do I need to do an estate return for 25/26 tax year, and then 26/27 tax year for the actual receipt of the funds?

The house sold for £15K less than the estimated value for IHT, due to the estate being 50% to charities, there was no IHT liability.

Is it just the SA900, and an SA903 to be completed? I had wondered if it was worth paying for an online service for the estate taxation. I am aware I need to do R185's for the charities and pther beneficiaries

poseidon1

Since you have registered the estate and obtained a UTR and presumeably been issued with tax return SA900, you will be required to report taxable estate income received in both tax years.

I am guessing with the estate property now sold and as PRs you now just hold cash, the charity beneficiaries in the background will be champing at the bit to receive their estate distributions sooner rather than later.

In this circumstance you cannot wait for the current tax year to end and a fresh SA900 issued next year in order to complete your estate tax compliance obligations and wind up the estate with all due speed.

Accordingly suggest you manually amend a 2025/26 SA900 to 2026/27, choose an effective date for the termination of the estate administration in the current tax year and calculate income tax payable to that cessation date.

Since you have the UTR, I would be inclined to forward a cheque direct to HMRC with a covering letter requesting early agreement of the SA900s submitted and the tax calculations therein.

https://www.gov.uk/pay-self-assessment-tax-bill/by-post

Incidentally, whether or not you submitted an online CGT return for the property sale, you are still required to report the same transaction on the SA900 in year of disposal, even though no actual gain arose, don't overlook this.

https://www.gov.uk/report-and-pay-your-capital-gains-tax/if-you-sold-a-property-in-the-uk-on-or-after-6-april-2020

Finally as mentioned in the February 2026 thread, also ensure R185 tax deduction certificates are circulated to all beneficiaries with the final estate distribution and reconcile with the formal accounts prepared. On the assumption there were no distributions to anybody in 2025/26, the certificates issued for 2026/27 will cover income and tax thereon for both tax years.

https://withfarra.co.uk/guides/sa900-estate-tax-return

Perdusys1955

Thanks for your very comprehensive response, that helps a lot. How do I complete a CGT return, I'm not sure how the value of the house is shown if there was no original value? Although the house has sold, we haven't completed as yet, but I understand that we are under a time constraint for 31st October. We have realised cash in her accounts, apart from two ISA's which we have left until closer to completion on the house sale. She has no shares, so there will be no further income.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82133307#Comment_82133307

The online CGT reporting for residential property sales below -

https://www.gov.uk/report-and-pay-your-capital-gains-tax/if-you-sold-a-property-in-the-uk-on-or-after-6-april-2020

A little bit confused about no original value ascertained. You specifically stated house sold for £15k less than estimated for IHT, surely that estimate is what you will be using assuming you have a valuing agent figure to back it up.

In any event if you are certain there will be no taxable gain, you could just report the calculated loss on the amended SA 900, if you feel you can submit that within the 60 days normally required for an online CGT return. However I do note you still have isas open, so it is a question as to how long it takes to close these before you can say you are approaching the end of the estate administration period for tax compliance purposes.

Perdusys1955

https://forums.moneysavingexpert.com/discussion/comment/82133416#Comment_82133416

thanks, I think the confusion is exactly when I need to report the sale of the house, as obviously although sold, we cannot be certain until the sale actually goes through. Is that when you would expect to report it on the SA900 for the 26/27 tax year? I have completed the self assessment for the period from April 25 to 31st January 26. If I understand what you say, I now need to do a SA900 for the rental income from February to April 26, and then the same for rental income for April 26 to July 26/27 as soon as the sale proceeds are in and the ISA's have been cashed. None of the balances of her bank accounts are interest bearing. How will the timing of the reporting of the sale of the house affect how we report the income? The house had not been sold before April 2026, and there is only the rental income to report? Does that mean we can report that as a simple estate?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82146089#Comment_82146089

Since you state you have no reportable gain for the house, on reflection you are not caught by the 60 day digital online CGT system which is a report and pay system where you have made a taxable gain.

Therefore as soon as the house sale is completed ( monies sat with the solicitor ) and you have cashed out the ISAs and therefore ready to start the estate distributions, that will be the effective date for the end of the estate administration for tax purposes.

As indicated in previous post you can certainly complete the 2025/26 SA900 paper tax return before its October deadline and lodge in isolation, but I would try and submit both returns ASAP to accelerate HMRC agreement and eventual closure of the file.

As far as reporting via simple estate procedure ( to avoid completing the SA900s) that ship seems to have sailed when you were issued with an SA900 for 2025/26 with accompanying UTR. I assume that came about by reason of a specific request by you? But for that the simple reporting process could have been available if the estate met all the criteria.

Finally, is their anything delaying the house sale, ie has no completion date been set yet? Your original post earlier this month suggested a sale had actually completed, but now that appears not to be the case.

Perdusys1955

The offer on the house was accepted before we had actually received the agreement for the Letters of Administration, but there are only two properties in the chain, with our buyers having a first time buyer and obviously no onward chain with ours. We have not yet reached a position where completion is set. We are at the stage of waiting for search results, draft contracts have been sent out.

I requested the UTR when I registered the estate as it seemed that due to dispersal of the house at £560K we could not do a simple estate return, and I did not realise that estate taxation followed the same tax year process as y/e 5th April. Ie, I didn't think about the fact it was two tax years either. Although I received paper SA100 from HMRC for personal taxation for 25/26, I was not sent any SA900, and assumed it had to be downloaded from the GOV.UK site.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82146578#Comment_82146578

At £560k sale price you were well and truly outside the parameters of the simple reporting system, so no real harm in now being subject to SA900 self assessment.

With no certainty when house sale will complete, I would get the 2025/26 SA900 lodged now and at least get that liability cleared.

Nothing you can do about the 2026/27 tax return for the time being, so you may as well leave the ISAs to continue racking up tax free interest for as long as possible.

In your chain it appears the first time buyer may perhaps be the weakest link, so hopefully their mortgage deal ( if they require one) is solid and secure.

Hope you get the house sale over the line, in the coming weeks.