deceased estate and r185 complications

deceased estate and r185 complications

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I've tried to whittle this rather complicated situation down to its basics:

I am executor for A's will. He died in 2013 leaving, as a specific legacy, an income-producing asset (properties
rented out) to B. The legitimacy of this legacy was in doubt until 2015, when it was confirmed and the asset
was transferred into B's name. The estate received income from the asset for the 2013-14 tax year. No
distributions have yet been made to B, and as total income tax liability for the Estate will be under
£10,000, any tax due for the administration period will shortly be payed by informal arrangement with HMRC.
I will then distribute the 2013-14 income to B.

Bearing in mind that:
1. A specific legacy (and its income) is considered the property of the beneficiary from the date
of death.

2. Rental income is deemed to be earned (and therefore tax liability arises) when it becomes due, not when it is
received,

My question is:

Can I then issue an r185 for the year 2013-14 to B so that he, as a non-taxpayer, can get a
tax rebate for that year (even though the tax itself was not payed by the Estate until the 2015-16 year)

If not, is there any way that B can get this rebate.

Replies (2)

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By cohen
29th Sep 2015 18:51

Hi

This is useful : http://www.hmrc.gov.uk/manuals/tsemmanual/tsem7490.htm

I read that as saying that you can issue an R185 for the earlier year, once the income has actually been paid.

 

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avatar
By krog50
01st Oct 2015 12:53

Thanks! that would seem to cover it.

Another point: the rental income for 2014-15 was not received by the estate, although it arose whilst the asset was part of the estate (it will now be payed directly to B, probably in 2016).

Is it in order for B to pay the tax on this income in his 2014-15 tax return, now that the asset is no longer part of the estate?

 

I'm asking these questions here as it's virtually impossible to contact anyone at HMRC who knows about these sort of details (unless I wait 2/3 months for an exchange of letters!). Thanks for any answers.

 

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