How To Pay Tax For A Deceased Individual?
When a taxpayer passes away, how can be their tax paid or returns filed appropriately? What are the things that must be considered carefully while paying tax for a deceased person? Read the article to find out.
When somebody passes away, their estate must continue to pay due tax prior to distribution of money to their heirs. In general, one may not require to pay anything initially after inheriting something, but they might have to submit tax later. If the person who has died paid too less or too much toll, the HMRC (Her Majesty’s Revenue & Customs) will need to make adjustments for calculation of their actual income tax.
At first, the death of the individual must be reported to all necessary government organisations. The HMRC and DWP (Department for Work and Pensions) will get in touch for collecting information about the tax, entitlements and benefits of the deceased person. In case the late individual completed a self assessment before death, a new tax return must be filed for the period starting from April 6th up to the day they died. In order to ensure quick filing, one may use any popular online income tax return app.
(Available on App Store / Google Play Store)
The estate of the deceased can continue to get income from savings, investments or rent. But it must pay the tax levied legally on the income. However, rental income, income from overseas and foreign share holdings, and profits from business would not have tax deducted automatically. Instead, personal representatives will need to complete and file a return for making it happen. The HMRC must be informed about any foreign income through their Deceased Estate Helpline (0300 123 1072). In case there is a need to obtain information about valuing assets, one can contact the Shares and Assets Valuation Helpline (0300 123 1082).
Coming to Capital Gains Tax, the estate will have to pay it only if its representatives sell off an asset but the value has already risen between the day of death and the selling date. But the representatives will receive an allowance, which has amounted to £11,100 for the year 2015–16. Besides that, there is also a Inheritance Tax that only estates worth more than its threshold of £325,000 are required to pay. However, representatives who are in civil partnership or married would not be liable for paying it until the worth of their estate becomes £650,000 or more than that. But all representatives must fill out the pertinent form while applying for a representation grant. This helps in establishing an estate’s value so that the HMRC can carry out the regulatory procedures. Those who need help for filling the form can contact the Probate of HMRC on 0300 123 1072.
