A musician client died recently. He had ceased performing decades ago, but in the meantime had received royalties from all over the world totalling around £5,000 per annum. These were disclosed on Page TR 3 box 17 "Other taxable income" (Post-cessation receipts) of the SA Return. It would appear that the widow will now become entitled to the fluctuatng royalties (maybe £4,000 to £5,000 per annum) until such time they are no longer payable. Deceased client never once left the UK to perform.
I have the following questions.
1) Ascertaining the royalty income annually has been a time-consuming matter. Are the Executors able to deduct accountancy fees for the time spent in determining annual royalty income in arriving at the income tax on the estate royalty income. Or is the accountancy deduction made in arriving at the widow's R185 residuary estate income. Or is no deduction available at all.
2) If accountancy is deductible, is it done on a cash basis.
3) Is there an alternative method of taxing the royalty income in the hands of the deceased. It is difficult to understand how this could be done if future royalty income is unable to be quantified.
4) After the Estate has been wound up, does the widow obtain a tax deduction for accountancy from royalty income on her own personal tax return.