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HMRC internal manual

Trusts, Settlements and Estates Manual

Deceased persons: beneficiaries of estates: how to check income from an estate

A beneficiary’s tax office normally accepts the amount of estate income returned. But where there is a formal enquiry into either

  • a beneficiary’s SA return, or
  • a beneficiary’s repayment claim

it may be necessary to check that the amount of the income entered by the beneficiary on the return or claim is accurate.

Income from an estate

Most estates are relatively small and are wound up quickly. In these cases, the tax liability of the personal representatives will have been settled informally by the tax office that dealt with the affairs of the deceased individual. Even if the case is one where a Trust and Estate Tax Return has been returned by the personal representatives for the administration period, the return may not provide sufficient information to check that the income reported by the beneficiary is accurate. This means it is often impossible for the tax office dealing with the estate to check that the amount of the income returned by the beneficiary is correct. If the beneficiary’s tax office is contemplating opening a formal enquiry it must liaise with Trusts & Estates Edinburgh first.

Trusts & Estates Edinburgh will advise how to approach the process of checking that the amount of income reported is accurate. It may also have third party information about estates with a substantial probate value (those over £2million) and/or where the total SA liability (IT and CGT) is in excess of £10,000. And as the enquiry progresses the beneficiary’s tax office may need to seek further advice from Trusts & Estates Edinburgh about income from the estate.