Dealing with HMRC following death

When a loved one passes away, their financial affairs do not simply come to an end. Among the many responsibilities faced by personal representatives — whether executors named in a will or administrators appointed by the court — is the duty to manage the deceased’s UK tax affairs.

This includes:

1. Dealing with any income tax obligations up to the date of death; and

2. Handling any income tax due on the estate during the administration period.

Navigating the UK’s income tax rules in the context of a deceased estate can be complex, especially at a time when families and executors are already coping with the emotional challenges of loss.

From understanding when to notify HMRC to completing final tax returns and calculating estate income during the administration period, there are important legal and procedural steps to follow. This article sets out clear and practical guidance to support that process.

Step One: How do I inform HMRC of a death?

To help simplify the process, the UK government offers a ‘Tell Us Once’ service.

As the name suggests, you only need to notify the government once. This service informs multiple departments — including HMRC, the DVLA, Passport Office, and Department for Work and Pensions — of the individual’s death, saving time and reducing administrative burden.

Step Two: Income tax affairs up to the date of death

Check if the deceased was registered for Self Assessment.

If they were in Self Assessment:

• Review whether any UK tax returns were outstanding before the tax year of death.
• File any outstanding tax returns for previous years.
• For the tax year in which the death occurred:
  • Submit a paper tax return by 31 October following the end of that tax year; or
  • Submit online via an agent (HMRC does not permit individuals to file online for a deceased person).

If they were not in Self Assessment:

HMRC will usually use PAYE records to determine whether any action is needed. They may contact the personal representative (PR) directly with further instructions.

Step Three: Income tax affairs during the administration period

The administration period runs from the date of death until the estate has been fully distributed (or, at least, until all income-generating assets have been sold or transferred).

How do I report any income to HMRC?

This depends on whether the estate is classed as simple or complex.

A simple estate is one which:

1. Has a gross value on the Grant of Probate of less than £2.5 million;
2. Has total Income Tax and Capital Gains Tax liabilities of less than £10,000; and
3. Has not had more than £500,000 worth of assets sold during administration.

If the estate is simple:

You can report income and any tax due through an informal arrangement, typically by writing to HMRC with a breakdown of income and tax payable.

If the estate is complex:
You must register the estate for Self Assessment, obtain a Unique Taxpayer Reference (UTR), and file formal tax returns for each tax year of the administration period.

De minimis tax liabilities

In both simple and complex estates, if the tax liability is very small, it may fall within HMRC’s de minimis thresholds. This means HMRC may choose not to require payment or formal reporting.

This is determined on a case-by-case basis. Even if the liability is low (often under £100), it’s important to disclose income and gains informally and await HMRC’s response. Keep full records in case further information is requested.

Step Four: Distributions and finalising tax affairs

Once the estate has been administered — with all assets sold or transferred and liabilities settled — personal representatives should prepare final estate accounts. These summarise all income received, expenses paid, and amounts distributed to beneficiaries.

If income was received during the administration period (such as bank interest, dividends, or rental income), tax may be due. After confirming that all liabilities have been met, the estate can be distributed.

Where income has already been taxed, you may need to issue R185 (Estate Income) forms to beneficiaries. These allow them to report any income received on their personal tax returns, if required.

Other important considerations

• Capital Gains Tax (CGT):
  If assets sold during administration have increased in value since the date of death, CGT may be payable. The estate benefits from a limited annual CGT exemption (currently £3,000), and gains above that may be taxable.
• Deadlines and penalties:
  Ensure all tax returns and payments are submitted on time. Late filings can lead to penalties and interest charges.
• Professional advice:
  If the estate includes complex assets (such as businesses, overseas property, or trusts), it is advisable to seek help from a professional experienced in estate taxation, such as here at ETC Tax.

Conclusion

Managing income tax for a deceased estate is a critical responsibility for personal representatives. While HMRC provides tools and some flexibility — particularly for simple estates — the process still involves legal, financial, and administrative obligations that must be handled with care and accuracy.

By following the steps outlined above, maintaining good records, and seeking guidance where needed, you can help ensure the estate’s tax affairs are managed correctly and efficiently, allowing for a smooth and timely distribution to beneficiaries.

If you’re unsure about your obligations or are dealing with a more complex estate, ETC Tax is here to help. Our team of specialist tax advisers has extensive experience in dealing with deceased estates and can provide tailored support—from informal disclosures to full Self Assessment returns and estate tax planning.

Next steps in dealing with UK estate income tax

Get in touch with ETC Tax today to discuss how we can assist you through every step of the process with clarity, confidence, and compassion.