Inheritance Tax and Other Tax Issues
In the event of the death of a family member, you may find the task of sorting out their details overwhelming. They may have left clear instructions on what they want done with their estate, how they want it divided, and any other items of interest connected to the distribution of assets. This is known as a will. If the will was done legally it will be honoured by the probate section and you should have no trouble going through the process.
When your relative has died, the first thing you may want to do is to find the will and all of their benefits and accounts. If they were receiving pension benefits, for example, you’ll need to contact the government offices to tell them that this person has died. They must know so they stop paying the benefits.
The executor of the estate as named in the will can then begin the process of probate. There may be taxes owing on the persons estate, or the estate may have tax owed from previous years. The government website has a great deal of useful information regarding all matters of interest when a person has died. If you need any help, you can hire a solicitor to assist you in understanding the laws and any details you will need to address.
The tax and National Insurance will need to be addressed. The executor of the estate will be the one appointed to take care of those details along with anything having to do with the estate and the division of it. The executor must contact the Tax Office to find out about the person’s tax owed and whether there is any tax that should be refunded. The HMRC (HM Revenue and Customs) has an Enquiry Centre that is there specifically for you should you have questions that need answers. They will want you to provide the decedent’s full name, address, and National Insurance number if you can find it. Sometimes if you are fortunate you’ll find all of the personal papers gathered together in one spot in a drawer, a file cabinet, or perhaps even in a shoe box in the closet. The information may also be stored on the person’s personal computer. You’ll look for pensions, annuity pay-outs, benefits, bank accounts, building society information, safe deposit box key, etc.
As the executor, you will need to fill out several forms that the government entities need to process the probate details. Find out, if you can, whether they paid their taxes through PAYE. If so, the Tax Office can mail you a form R27. You can also download it and print it from their website. Self-assessment payments may have been made, in which case you will still fill out the R27 as well as a Self-assessment tax return form, which can actually be done at the year’s end. Sometimes that may be the best option because you might just need to do it again if asked by the Tax Office.
