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Income tax liability in deceased estate

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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By pawncob
13th Sep 2010 22:41

What's the beef

They are ignoring (and ignorant of) the law. And yes the bank should have deducted tax.   But what's the diff as far as the beneficiaries are concerned? (apart from the tax year)

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14th Sep 2010 10:09

Not up to the beneficiaries -

The strict rule is that liability for paying all debts including taxes lays with the executor(s) of the estate.

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14th Sep 2010 23:13


Looking at the rules re R85s, this form is no longer competent for interest payments after death so provided the bank/building soc had been told of the death, then the interest would  have to be paid out net anyway.

I think that the fact that the solicitor has made no attempt to comply with the law is deplorable.  Even the explanation is false - after all, a Trust and Estate Tax return could have been filed and tax paid easily enough. This would follow on from notifying the Revenue of the taxpayer's death and completing form R27 confirming there was untaxed income.

The fee for dealing with the estate was £8k. How can one charge that kind of money and then simly ignore the law because the Revenue are difficult to deal with!!

I do wonder whether the local income tax district have even been advised of the death. The deceased was not submitting returns as his income was slightly below his age allowance.



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14th Sep 2010 23:19

£8k ???????

It would have to be a complex estate to warrant that.  Nice work if you can get it.

From what detail you give it doesnt sound as if this was a particularly large of complicated estate.

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15th Sep 2010 01:49

Not complex

£200k investments

£180k house

No trust. Straightforward will dividing estate equally 6 ways. One executor.

No IHT ( spouse limit unused so b/f )

You see, for £8k I would expect a 100% job, not a "we don't do income tax here" job


But...nice work etc



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