After a death, there's a lot to manage at a distressing time. However, it's important to deal with tax and benefit affairs as soon as you can so that you receive any money you're entitled to and pay any taxes on time. Sometimes timescales are short.
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This short, simple online questionnaire will give you a tailored guide to the steps you need to take when dealing with the tax and benefit affairs of someone who has died. The guide will be of most use if the financial affairs of the deceased, their spouse or civil partner are straightforward but it will give a helpful starting point to anyone who is beginning to deal with a bereavement.
A new service has been introduced in England, Scotland and Wales called 'Tell Us Once'. This service isn't available in Northern Ireland. If your local authority offers this service they'll tell you about it when you go to register the death. Using this service means the information you give is shared with other departments and services that need to be told. Use the link below to find out more about the service and whether it's offered in your area.
If you haven't used the Tell Us Once service, any close relative of the deceased can tell HM Revenue & Customs (HMRC) about the death. This should be done as soon as possible so that HMRC don't send mail that might cause distress.
HMRC will need the deceased's full name and address, and National Insurance number, if possible. You'll also need to give the name and address of the person who's dealing with the estate - the 'personal representative'.
The deceased may have been paying:
Once HMRC have been told about the death they will make arrangements to stop collecting National Insurance contributions. You may also want to contact the deceased's bank or building society yourself though to stop any payments being made.
If you're the spouse or civil partner of the deceased person you may need to report your change of circumstances to HMRC if you have a National Insurance 'reduced rate election'. Find out more in the link below.
If you're claiming tax credits - or your spouse or partner was - and your child, spouse, or partner dies, your payments may change. You'll need to tell the Tax Credit Office within 1 month of the death. If you don't, you might get too much money and have to pay it back or not get all the money you're owed.
If your child has died, Child Benefit payments will carry on for a short while after the death, and could help with extra costs at this difficult time.
If your child died before you'd claimed Child Benefit for them, you can still do so. Child Benefit may be paid for up to 8 weeks. But you'll need to make your claim within 3 months of the date your child died to get payment for the full 8 weeks.
When a child dies, any money in their Child Trust Fund account - including any payments they have received from the government - usually passes to whoever inherits the child's estate.
Not all benefits are dealt with by HMRC. You can find out who to contact by looking at paperwork belonging to the deceased.
When someone dies, the 'personal representative' is responsible for settling the deceased's financial affairs and for dealing with their estate.
In England, Wales and Northern Ireland this person is called the:
In Scotland the term executor is used whether or not there's a will. The term personal representative covers both roles as the responsibilities are the same.
If you're the personal representative and you want HMRC to deal directly with someone else such as a professional adviser, a friend or family member, you'll need to let HMRC know. Sometimes you can do this by signing a declaration on 1 of the forms that you've been asked to fill in such as form R27 or form IHT400. Other ways to tell HMRC can be found by following the link below.
Probate (confirmation in Scotland) is the system that gives a personal representative the legal right to administer and distribute the estate according to the deceased's wishes. Probate may not be needed if the estate is a low-value estate or passes to the surviving spouse or civil partner.
Inheritance Tax forms are part of the probate process, even if the estate doesn't owe Inheritance Tax. Inheritance Tax is usually only due if the estate - including any assets held in trust and gifts made within seven years of death - is valued over the Inheritance Tax threshold of £325,000 in 2014 to 15.
The personal representative will need to settle the deceased's tax affairs up to the date of death. The deceased might have paid too much Income Tax in the tax year in which they died. If so, and you're the personal representative, you'll be able to claim a tax refund on their behalf. You'll also be able to claim a refund if they paid too much tax in any of the previous four tax years.
HMRC may send you form R27 to complete for the period up to the date of death when they know about the death. If any tax is due you may be able to make an informal payment without having to fill out a Self Assessment Tax Return.
If you're the personal representative, you'll need to complete a Self Assessment Tax Return if the deceased completed tax returns in previous years. The return will cover the period from 6 April to the date the person died.
You'll need to complete this tax return for the period from the previous 6 April to the date of death.
The period that runs from the day after the date of death, until the personal representative finally settles all of the financial affairs is known as the 'administration period'. During this time the deceased's estate may still be receiving income - for example from interest from savings or rental income from property. Most of this income will have been taxed already such as interest on bank and building society accounts and dividends on company shares. But Income Tax will be due on any untaxed income such as rental income.
There may also be Capital Gains Tax to pay if the assets increase in value after the death, and are sold or disposed of by the personal representative during the administration period.
If you're the personal representative you may be able to make an informal payment of these taxes. You'll need to get in touch with HMRC and they'll tell you how to pay any tax due. However If the estate's tax liability is not straightforward or is likely to be more than £10,000 you'll need to complete a Trust and Estate Tax Return.
Lump sums are usually paid if a pension scheme member dies while they're still working. The personal representative should contact HMRC if the member's pension scheme savings are more than the lifetime allowance (£1.25 million in the 2014 to 15 tax year).
If you're the surviving spouse or civil partner of someone that's died, you may get extra money from income such as pensions, annuities or other benefits. This extra money may affect how much tax you need to pay. HMRC may issue the P161(W) Bereavement Benefit Coding Form to you to find out this information so that they can make sure as soon as possible that you don't overpay or underpay tax. You can follow the link below to find a copy of this form to fill in and send.
You may be able to claim certain benefits and one-off payments if you lived with or were dependent on the deceased. There are time limits, so you need to apply as soon as possible. Some bereavement benefits are taxable. If you receive a taxable bereavement benefit, you'll need to let HMRC know.
If you or your spouse or civil partner were born before 6 April 1935 you may have been claiming the Married Couple's Allowance. If one of you dies, you'll still get the Married Couple's Allowance you're due for that tax year but not the year after.
If your spouse or civil partner was claiming Blind Person's Allowance and they didn't have enough income in the year they died to use up all the allowance, you can ask HMRC to transfer what's left to you for that tax year.
Some people who have a low income have registered to have their interest on savings paid tax-free. If your income goes up your tax-free allowances may no longer allow you to do this. If this happens it's important you tell your bank or building society straight away so they can start taking tax off your interest. Otherwise you may have a tax bill at the end of the year.
If you've been made the guardian of a child whose parents have died, you might qualify for Guardian's Allowance.
If someone has died and left you money, assets or property, you might, in certain situations have to pay tax.
The deceased's will or the rules of inheritance that apply when there is no valid will, may have provided for some or all of their assets to go into a trust when they died. Or part of their estate may already be held in a trust that they set up during their life. The responsibilities of a trustee are different to those of a personal representative, although sometimes the same person will take on both roles.