How is your income taxed after your death?

You, or at least your estate, may be eligible for a tax rebate after you die.

A personal representative, be it an executor or an administrator, can claim your whole personal allowance for the tax year in which you passed away. But that only applies to income received prior to your death. Money received after that is taxed separately.

Beneficiaries must declare their legacies to Her Majesty’s Revenue and Customs (HMRC) but inheritance tax will usually have been paid by the estate. Higher-rate taxpayers may be liable for more tax but non-taxpayers can claim a rebate.

Following a death, HMRC must be notified in writing. The taxman needs to know the date of death and the deceased’s tax reference and National Insurance numbers. A personal representative may need to fill in a form so HMRC can assess whether tax is due or can be reclaimed.

Any subsequent interest received from banks or building societies will be taxed at the savings rate. Rents from property, for example, will be taxed at the basic rate. Tax at the dividend rate may have to be paid on foreign dividend income.

For expert help with the probate process, contact Heritage Will Writing on 02380 879243.