Dealing with the death of someone you know, whether family, friend or colleague is an extremely emotional process. Unless you have experienced this in your life before, having to make arrangements in such circumstances for the first time can be quite daunting at a time of great emotional distress.
The person dealing with the estate of the person who has died is called an Executor or Administrator. As part of their responsibility the Administrators or Executors of an estate have to consider whether they need to complete and submit a tax return for the period of administration.
A trust and estate tax return must be completed if any of the following apply:
- the total Income Tax and Capital Gains Tax due for the administration period was more than £10,000
- the estate was worth more than £2.5 million at the date of death
- the date of death was before 6 April 2016 and more than £250,000 a year came from the sale of the estate’s assets by Administrators or Executors
- the date of death was on or after 6 April 2016 and more than £500,000 a year came from the sale of the estate’s assets by Administrators or Executors
It is worth noting that the trust and estate tax return is only for the estate - it is separate from any personal tax returns you may have to submit on behalf of the deceased for the period up to the date of death.
Sending the tax return
To send an estate tax return, you must first register the estate online. You must register by 5 October of the tax year for which you are sending in a return.
You will get a Unique Taxpayer Reference (UTR) in the post within 15 working days (21 if you are abroad) - you will need it to send in a tax return.
Once you have received your UTR, you can either:
- fill in paper form SA900 and post it to HMRC by 31 October after the tax year it applies to
- send it electronically by 31 January (3 months later)
After you have sent in your return, HMRC will tell you how much the estate owes. You will need to pay the Self Assessment bill by the deadline.
If you do not need to send a tax return
You can make ‘informal arrangements’ instead by writing to HMRC and providing them with:
- the Income Tax and Capital Gains Tax amount due for the administration period
- the name, address, National Insurance number, and UTR of the deceased
- your name and contact details
Once your calculation of the tax liability is agreed by HMRC you will be provided with a payment slip with any tax that needs to be paid.
We are happy to advise Administrators and Executors on their responsibilities in respect of tax for the periods both prior to death, and for the period of administration. We can assist in dealing with the registration of estates and the completion and submission of tax returns, or if appropriate, assess and correspond with HMRC for estates being dealt with under an informal process.
For further advice on this and other related issues, please contact our Wills, Tax & Estate Administration Department.