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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Deceased persons: administration periods: agreeing the tax liability


Finalising the tax liability for most estates will be fairly straightforward. At the end, or towards the end, of the administration period a computation of the liability should be obtained and agreed with the agent or personal representative.

It is recommended that only one payment is obtained to cover the liability of the whole of the administration period, even if the administration period spans more than one tax year.

However see TSEM7376, for cases that should not be dealt with informally.

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Income tax

You should bear in mind that income is charged to tax at the rate appropriate to the nature of the income received, for example

  • dividends are chargeable at 7.5%
  • investment income (bank, building society interest etc) is chargeable at 20%
  • other income such as rents or business profits are chargeable at the basic rate.

The starting and higher rates do not apply to personal representatives in the same way as they do for individuals. Personal representatives do not get personal allowances.


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Capital gains tax

CGT liability can be accounted for informally where the proceeds of sale of any assets from the estate are less than £500,000 in any one tax year. It is not intended that you carry out a critical examination of the CGT computation, but before you agree a computation ask an Inspector to review it to ensure that there are no obvious compliance risks.

One of the main aspects to consider is the date of death value of the asset sold. If the estate paid Inheritance Tax (IHT), HMRC Trusts & Estates Inheritance Tax may have agreed the date of death value and you can accept that value for CGT purposes.

If the estate has not paid IHT, or the particular asset was not chargeable to IHT, it will be necessary to consider the accuracy of the date of death value returned in the computation.

You can find further instructions on the date of death valuation in the Capital Gains Manual at CG32210 onwards.