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HMRC internal manual

Trusts, Settlements and Estates Manual

Deceased persons: conditions for informal payment procedures

Conditions for using this procedure

Personal representatives may make an informal payment of the total liability for the whole period of administering the deceased’s estate if certain conditions are met. The main condition is that the total tax liability (income tax plus capital gains tax) for the entire administration period is less than £10,000. The other conditions are that

  • the probate/confirmation value of the estate is less than £2.5m, and
  • the proceeds of assets sold in any one tax year are less than £250,000, and
  • the estate is not regarded as complex, so it can be dealt with without the personal representatives having to complete a Self Assessment return.

Informal payments should normally be accepted by the office that handled the deceased’s tax affairs.

The office that handled the deceased’s tax affairs should normally accept informal payments.

An informal payment may not be accepted where any part of the payment relates to:

  • tax on payments within ITA/S946 or
  • a recovery of tax overpaid under Section 30 TMA 1970, or
  • the recovery of excessive tax credits under Section 252 ICTA 1988.

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Trust created.

Where a trust is created under the terms of the deceased’s will or the rules of intestacy, responsibility for dealing with the administration period liability should be passed to the relevant HMRC Trusts & Estates Office (TSEM1420).

Provided that the conditions referred to above are met, personal representatives may make an informal payment of the total liability for the whole period of administering the deceased’s estate to the relevant HMRC Trusts & Estates Office.

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SA return issued

Informal payments may not be accepted where a Self Assessment return has been issued to the personal representatives. In such circumstances, the personal representatives are under an obligation to complete and send back the return. But if it is necessary to issue a Self Assessment return this should usually only be issued by an HMRC Trusts & Estates Office (subject to the conditions in TSEM7406).

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SA record created

If a Self Assessment record has been created but no return issued, and the case meets the conditions for informal payments, make the record dormant to prevent the issue of returns and proceed in accordance with these instructions.

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Any enquiries into the personal representatives’ computation must be dealt with informally.

If any offence has been committed, such as failure to notify chargeability, interest and penalties should not normally be pursued (see SAM: Permanent cessation: period of administration). But if it eventually transpires that the net value of an estate is substantial, you should consider whether an enquiry should be opened for the periods prior to death (EM2000 onwards).

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Where the conditions above are met, encourage personal representatives to make an informal payment using the procedures set out in TSEM7412 and PAYE90010 onwards. No formal charge will be created on the taxpayer record.