Mark Taylor
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RE: Tax On Income Received On Late Father’s Estate
Thank you. -
Tax On Income Received On Late Father’s Estate
Good morning. I am in the process of finalising my late Father’s estate. My Accountant has advised me that any income received (eg. Building Society interest), from the date of passing until finalisation, is taxed at a flat rate of 20%. Does this include refunds from utilities: Telephone and Water Supply? I understand that this is reported to HMRC on a letter with an accompanying cheque for the tax due- is this correct? Thank you. -
RE: Paying CGT after death
Jess. Firstly, I’m sorry to hear of your loss. I’m not so sure the reply you have been given is strictly accurate. I have a similar situation to yourself ( selling a deceased’s Parent’s estate). I lost my Father last May and I am the Executor to his estate ( I assume you are the Executrix for your late Mum?). CGT is calculated on the gain between the value of an asset, which is assessed as being that at the time of death, and the eventual sale price. The gain starts on anything above the Annual Exemption Allowance- currently £6,000 per person. So if the sale price of your late Mum’s property did not exceed a gain of £6,000, from the estimated value at time of death, there is no CGT to pay- as you quite rightly mentioned. Even if there was a CGT liability, there are a number of costs which can be used to reduce the CGT liability, eg Solicitor’s fees, Estate Agent fees, any costs that you may have incurred in improving the property from the time of death to sale. I certainly do not understand the statement in the reply about each of the Beneficiaries having to assess if they have a CGT liability, based upon their share. That just is not correct I’m afraid. CGT is calculated on the whole estate (including anything else that may have been sold). It is for the Executor/Executrix to work out and pay any CGT, not the Beneficiaries. Unfortunately the reply you have received does not answer your question: is a return still required if there is not a CGT liability? I’m not sure to be honest and have asked HMRC on this forum the same question- albeit a slightly different scenario to yourself, but the question is the same. I haven’t received a reply yet. Re the grant of probate, there is no loop to close with regard to that. Once you receive the Grant, that is the end of the role for HMCT- they are totally independent body from HMRC. Finally, just be aware that in addition to CGT, income tax is payable (at a flat 20% rate), on any income received into the estate, from the time of death until finalisation. For example, if your Mum had savings in a bank or building society, any interest received during the period up to finalisation will attract tax at 20%. This can be paid to HMRC by sending them a cheque and a covering letter. I know this is correct as I was told this by the Accountant I am using to do my CGT return for me. I hope this is of some help to you Jess and that you get an answer to your question from HMRC