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Tax Affairs After a Death

By: Beth Morrisey MLIS - Updated: 8 Jan 2017 | comments*Discuss
Death tax inheritance Tax capital

When someone dies part of wrapping up his or her affairs involves settling the taxes on his or her estate and notifying the proper tax authorities of the death. To do this it is important to contact the deceased’s local tax office as soon as possible. If this office is unknown, the executor or administrator of the estate can contact his or her own tax office and explain the situation with details of the deceased’s name, address and National Insurance number, if it is known. Alternatively, contacting an HRMC (HM Revenue and Customs) Enquiry Centre is also an option. Once contact has been made with one of these offices, a representative will explain what must been done next and which tax forms must be completed.

Necessary Information

In addition to knowing the deceased’s name, address and National Insurance number there are other pieces of information that may help the executor or administrator of an estate as (s)he wades through tax affairs after a death. Such information would include:

  • The deceased’s date and possibly place of birth.
  • The deceased’s marital and parental status.
  • The deceased’s employment status (employed, self-employed, unemployed, retired, etc.).
  • Details of the deceased’s income.
  • Details of other earned or taxable income (such as from renting out property).
  • Details of public and/or private pensions.
  • Benefits that the deceased was receiving.
  • Interest earned on current, savings or building society accounts.
  • Any other assets held by the deceased.
  • Any outstanding debts owed by the deceased.

      Notifying Institutions of a Death

      In the course of dealing with tax affairs after a death it will become necessary to notify related institutions as well. Any banks or building societies with which the deceased kept an account should be notified so that accounts can be readied for closure and interest paid on the accounts will terminate in the correct fashion. If the deceased also had assets with private companies such as stockbrokers, for example, then they would need to be notified as well. Government offices from which the deceased received benefits, the National Insurance Contributions Office (if the deceased was self-employed), the deceased’s employer and any entity from which the deceased was drawing a private pension should also be notified. As a general rule of thumb, if the deceased had financial arrangements with an entity at the time of his or her death, that institution should be notified.

      Taxes Relating to a Death

      While every circumstance will be different, two taxes that are often involved in the settlement of an estate include Capital Gains Tax and Inheritance Tax. Capital Gains Tax may be payable if money is made from selling parts of the estate, such as property, at a higher price than the current market value. Inheritance Tax may be payable is the value of the estate is above a certain limit. Because the circumstances of every estate will be different, it is highly advisable that an experienced specialist such as a solicitor and/or accountant be consulted about each matter.

      Tax affairs after a death can become confusing and involved processes. While local tax offices and HMRC Enquiry Centres are available to help, they can not complete the process for you. If you require further information on taxes affairs after a death, consider consulting a solicitor and possibly an accountant who will guide you through the process.

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      Mum and dad owned a house but were not married.Mum died first and left her half of the house to me, they had tendency in common, it was left to her estate and I am the only beneficiary.We had the house valued at the time and I paid inheritance tax on her half.Dad has now died several years later, his half of the house is left to me too, with his half of the house I will not need to pay inheritance tac as it does not exceed the allowed amount.My question is.....if my mothers hslf had increased in value, which if has will I be liable for any taxes, I.e. Capital gains tax.I have choice in selling the house as my dad lived in it and I wasn't able to sell fir this reason.
      Smithypj - 8-Jan-17 @ 12:31 AM
      My dad has just died at aged 66. His wife is 51 and has a 19 yr old son in education. She will be entitled to claim a Widows parents Allowance to live off for the next year but she has a £3000 funeral bill to pay and no means by which to do so. The benefits office have advised her that as dad was over 65 she can't claim a Bereavment Payment and because she has a dependent she can't claim a funeral grant. Apparently there are no other options. I don't know what I can do to help, any suggestions?
      Sjb1812 - 9-Oct-15 @ 7:07 PM
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