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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Employment income: basis of assessment for general earnings: earnings received after the death of an employee or office holder: the charge on personal representatives

Section 13(4) and (5) ITEPA 2003

If an employee or office holder dies and earnings are received after the date of death, the personal representatives are charged to tax on them (see EIM42380). They are charged:

  • at the OT rate only
  • in the year the earnings are received (or, where the special rules for certain foreign earnings apply, received in the United Kingdom)
  • without any allowances, deductions or reliefs except for the deductions, reliefs and exemptions that would have been due to the employee had they lived.

The personal representatives cannot claim deductions for expenses that they incur separately themselves. The main deductions due are therefore:

  • expenses within Sections 336 to 338 ITEPA 2003 incurred by the employee or office holder (see EIM31620 onwards)
  • balancing allowances due to the employee or office holder; balancing charges will also fall on the personal representatives (see EIM36500 onwards)
  • foreign travel and accommodation expenses within Sections 341, 342 and 370 to 376 ITEPA 2003 incurred by the employee or office holder (see EIM34000 onwards)
  • professional fees and subscriptions within Sections 343 and 344 ITEPA 2003 (see EIM32880 onwards)
  • where a lump sum is assessable under the “golden handshake” provisions the various exemptions that are available under Sections 404 to 414 ITEPA 2003 (see EIM13500 onwards).

A deduction that is due is not limited to expenses actually paid by the deceased. The personal representatives can have a deduction for an expense that the deceased was due to pay but that the representatives actually settle.

As regards:

  • the time limit for assessing personal representatives, see EIM42400
  • the treatment of earnings received up to the date of death, see EIM42410.