Income tax liability in deceased estate
I was presented with a set of estate accounts with about £600 of untaxed interest from various sources. The beneficiaries had been instructed by the solicitor dealing with the estate to put their respective shares of this on their SA100s.
Having written to the solicitor querying why the basic rate tax had not been dealt with by the PR submitting an estate return, I received the following response:
"Gross interest was received which will be passed to the beneficiaries in due course. Basic rate tax will not have been deducted and our normal practice ( to avoid enormous delays by HMRC ) is to point out that the gross payment should be mentioned on the beneficiaries own Tax Return. It will then be up to the beneficiaries to pay basic rate tax"
My reaction is that the solicitors are simply ignoring the law. Besides, the income arose in 2009/10 and the first intermin payment to the beneficiaries was in Feb 2010, so this income alread has been paid out.
One other point. Some of the income is from a bank which had received an R85 from the deceased during his lifetime. Does the R85 cease to be competent on death? ie should the bank have deducted tax?
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