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Tax Affairs After a Death

By: Beth Morrisey MLIS - Updated: 21 Mar 2019 | 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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      Share Your Story, Join the Discussion or Seek Advice..
      If my house is valued at 35 to 40 thousand can I leave it equally between my 4 children without making a will, will they have to pay any tax as its not of big value
      Dee - 21-Mar-19 @ 6:58 PM
      Hi, My Mum died recently leaving no property and very few personal possessions as she spent her final years in a care home. She only had one bank account, a joint one with myself with a balance of approximately £10k, title of which has already passed to me. No will was left and I have one sibling. Will I need to apply for probate and does the £10k form part of her estate under intestacy law? Thank you in advance
      Confused - 17-Jan-19 @ 9:50 AM
      Hello, my father died in 2015 and my brother in 2017 and then my mother in 2018. I have been living at my parents house for the past 7 years as I was looking after my elderly parents (they were in their late 90s when they died). I have had to sort out everything and now I have a solicitor who has told me that I have to sell my parents house (where i live) and that my mothers estate will be split between me and my brothers long lost and estranged son (me, my parents and my bother had not seen him in almost 30 years). Is this true that I am to be forced to sell my home? I have another property which I let out and for the last 7 years I have lived permanently at my parents home and made this my home, including doing many renovations over the years. I am worried about being homeless and also I do not really want to leave my home as I have friends locally and all my support is here. I would be very grateful for any advice. Thanks
      JL46800 - 31-May-18 @ 2:03 PM
      Sarah - Your Question:
      Whoops, my post should read sold for £175,000 and solicitor took £20,000. I did contact an ombudsman who asked me to contact the solicitor. The solicitor replied very haughtily. The ombudsman suggested I wait until the beneficiaries receive payments and if not happy contact them again. I am beginning to wonder if this solicitor will ever make any payments. Is there any time limit? Thank you for any advice.

      Our Response:
      Ha ha sorry we'd already replied! No there's no real time limit, sometimes these things do take years. Follow the Ombudsman's advice for now. It might be worth asking another solicitor (from a different firm) to look into it.
      FacingBereavement - 30-May-17 @ 2:47 PM
      Sarah - Your Question:
      My second cousin died 5 years ago. We believed she only had a handful of relatives. She was not married and had no children. She had no visitors. We could not find a will so my sister visited a solicitor who took the case on. A family tree was done and about a year later 52 distant relatives were traced! Each received a letter from the solicitor asking them to confirm they were the correct person and that were a possible beneficiary. 5 years later the house was sold by the solicitor for £175. The solicitor has taken about £20 in fees. The beneficiaries have not received anything yet. The solicitor says this is because he needs to take out an indemnity insurance in case someone comes forward at a later date to make a claim. We asked how long would this take and he said how long is a piece of string? I don't know if interest is being added to the estate. It seems an awful long time to find indemnity policy. Does this sound right?

      Our Response:
      It might be worth make enquiries at the law society etc. Selling a house for £175 certainly doesn't sound right.
      FacingBereavement - 30-May-17 @ 2:46 PM
      Whoops, my post should read sold for £175,000 and solicitor took £20,000. I did contact an ombudsman who asked me to contact the solicitor. The solicitor replied very haughtily. The ombudsman suggested I wait until the beneficiaries receive payments and if not happy contact them again.I am beginning to wonder if this solicitor will ever make any payments.Is there any time limit? Thank you for any advice.
      Sarah - 28-May-17 @ 5:01 PM
      My second cousin died 5 years ago.We believed she only had a handful of relatives. She was not married and had no children. She had no visitors. We could not find a will so my sister visited a solicitor who took the case on.A family tree was done and about a year later 52 distant relatives were traced! Each received a letter from the solicitor asking them to confirm they were the correct person and that were a possible beneficiary. 5 years later the house was sold by the solicitor for £175. The solicitor has taken about £20 in fees. The beneficiaries have not received anything yet. The solicitor says this is because he needs to take out an indemnity insurance in case someone comes forward at a later date to make a claim.We asked how long would this take and he said how long is a piece of string?I don't know if interest is being added to the estate.It seems an awful long time to find indemnity policy. Does this sound right?
      Sarah - 28-May-17 @ 4:54 PM
      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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