At PD Tax we recognise that the death of an individual is a difficult time. However, tax obligations, such as the requirement to file tax returns and pay the tax due on behalf of the deceased, do not cease upon death.
The taxes typically involved are inheritance tax, income tax, and capital gains tax, and it is the personal representatives’ responsibility to ensure that the returns have been submitted and the correct tax has been paid.
From a tax perspective, the personal representatives may need to:
- Calculate and pay any inheritance tax due on the estate
- Prepare estate accounts
- Submit inheritance tax returns as part of the probate process
- Ensure that the deceased’s tax affairs are up to date for the period up to the date of death
- Register the estate with HMRC, complete tax returns, and pay income tax and capital gains tax for the period of administration
- Provide information to the beneficiaries regarding the amount of taxable income distributed to them by the estate (typically this is done using form R185).
Personal representatives can become personally liable for tax liabilities where the assets have already been distributed to beneficiaries (see Graham Usher & Martin Perkins Executors of Terence Guy Deceased v HMRC). It is therefore important that personal representatives seek professional tax advice when faced with complex or unfamiliar issues.