Small inheritance

paddypaws101

A distant relative has died and left me a small sum of money, around £4500. I am self employed, do I need to declare this sum to the tax man? How should I enter it in my books so the tax man is satisfied it is an inheritance and not earnings.

nephilim

you declare it as inheritance and have a copy of the relevant paperwork to prove it, taxman will not take any money from you for it.

fengirl_2

No, you do not declare it as an inheritance. If IHT is due, it will already have been paid by the estate.
All you need to do is to keep the correspondence for 6 years in case you are subject to investigation, so you can prove where the cash came from.

paddypaws101

Thanks for advice. As it is a small sum it is coming to me indirectly ie the money is going to my mother with the request that she divide it between her children. So I wont really have any formal paperwork as such. My accountant does my books for me so I will have to justify the payment to him and I suppose I want to know how best to do that to satisfy him and - heavens forbid - the dreaded tax man.

RayWolfe

Keep the paperwork your mother has then.
This has nothing to do with your business, the taxman, your accountant or anyone else.
However if you don't keep separate bank accounts for your business and personal banking then you could have a problem ... but not if you have the evidence.