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Posted Tue, 21 Nov 2023 20:06:03 GMT by
Hi, I am the Personal Representative for a deceased's estate, It's a very straightforward estate with only bank and savings accounts, totalling circa £250,000. Probate has been granted and I am currently collecting in the assets. Money is being held in a savings accounts, in my name, which is used exclusively for the estate. 45% of the estate has been gifted to me in the will. I understand I am required to informally notify HMRC of any interest earned on the estate during the administration process and that I will have to pay 20% tax on this interest. My question is, how do I ensure separation between estate income tax, and my own personal allowance. My worry is the bank (understandably) will notify HMRC of the interest earned at the end of the year and this will impact my own personal tax code, despite it being held as part of an estate during the administration process. I'm sure this is a common issue but I cannot find an answer. Many thanks.
Posted Wed, 22 Nov 2023 12:53:49 GMT by HMRC Admin 10 Response
Hi
As the account is in your name, yes it would automatically be taken as your income and form part of your savings allowance.
You would need to have an account that was in the name of estate or you as the executor of the estate so that its not yours personally.
You should discuss this with your bank.
Posted Wed, 22 Nov 2023 14:06:09 GMT by
Thank you for the reply. Interestingly the three banks I have spoken to no longer open Executor accounts as they deem them unnecessary. It seems I am caught between a rock and a hard place. Is there an alternative mechanism for claiming my allowance back if I am unable to open such an account?
Posted Fri, 24 Nov 2023 08:47:07 GMT by HMRC Admin 20 Response
Hi dreye148,
You would need to write in with evidence to support the claim that one of the accounts is for the estate and not yours personally.
Thank you.
Posted Thu, 21 Mar 2024 15:21:03 GMT by Tony
Banks do not provide accounts in any name other than individual(s) names (e.g. for executors, "Executor of ...") other than business accounts, for which there are other naming restrictions (and costs). This is probably in part due to AML regulations. Given interest rates have not been sub 1% for some time now and inflation is non-negligible, personal representatives (PRs) would not be acting in the best interests of beneficiaries if they did not avail themselves of interest bearing accounts. Since HMRC's savings "allowance" for IHT is only £500, this is going to become a considerable issue for HMRC: Might I suggest HMRC look into enabling PRs to declare to HMRC bank accounts used for the management of Estates. Also for declaring assets appropriated (by means of "bare trusts") and their ultimate beneficiaries.
Posted Sat, 04 May 2024 20:08:43 GMT by Sid2
dreye148, it would be great to know if you were successful presenting evidence to HMRC . It should be reasonably easy to do this and I would have thought HMRC will be keen to enable such reporting in the absence of the banks providing executor easy access payment accounts that pay interest. The typical (albeit rare) executor account current account pays jack-squat so HMRC should prefer 20% of something rather than 20% of nowt. I have this dilemma to address soon and as Tony indicates my obligation to beneficiaries is to use an interest bearing account.
Posted Tue, 07 Jan 2025 11:26:58 GMT by AnnemarieN Harry
I also have this problem. I am joint Executor and Trustee in a Will which has probate. A house was sold and another needs to be sold so the process is ongoing. Because banks do not pay interest on Executor accounts and the house sale generated a large sum of cash, we had to put the money in a joint savings account in our names. We wanted the money to earn interest for the estate. This is purely estate money. Who will pay the tax on the interest earned as it is estate income not ours personally
Posted Wed, 22 Jan 2025 10:31:13 GMT by HMRC Admin 25 Response
Hi AnnemarieN Harry,
As it is in your name, it is seen as your income.
Thank you. 

 
Posted Tue, 28 Jan 2025 13:29:49 GMT by Tony
It's a bit unfortunate HMRC don't publish more accessible guidance on this. But the post by "HMRC Admin 20 Response" (24/11/2023 8:47 AM) is accurate if not particularly illuminating.
I hope the following is helpful to others but please let me stress that it does not constitute advice and I am no tax professional.

HMRC currently (Jan 2025) provides no routine mechanism for allowing individuals to indicate that a UK bank account held under their own name (possibly jointly with another person) is actually operated for the benefit of separate entity (e.g. an Estate or a beneficiary of a Trust). Therefore HMRC will attribute interest earned on money held in such an account ("savings income", a category of personal income) to the named account holder(s).
If it's a joint account, HMRC will assume the interest is attributed 50% to each of the two joint account holders.
See also https://www.gov.uk/apply-tax-free-interest-on-savings

To resolve this income being misattributed, soon after the end of the applicable tax year I wrote to HMRC at -currently- their "Pay As You Earn and Self Assessment" address, see http://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees
In my letter, I identified myself (name, address, National Insurance number, tax reference numbers) and the relevant bank accounts (bank/building society, sort code, account number, account holder name(s). For each account I indicated the value of the savings interest and how it should be attributed (e.g. the Estate's details, inc. tax reference number, or other beneficiaries details (inc. name, address, and national insurance number if known). Unfortunately, my letter was not properly assigned within HMRC and -unfortunately- ended up with the inheritance tax group. So it may be wise to phone HMRC around 6 to 8 weeks after you post the letter to ensure it reaches the correct destination its contents are understood correctly. At the end of the executry period, don't forget to pay the tax due by the Estate on any savings income, if such tax is due.

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