SE42380 - Emoluments from offices and employments: basis of assessment - emoluments received after the death of an employee or office holder
Section 202A(3) ICTA 1988 and Section 37(3) FA 1989
When an employee or office holder dies, emoluments received (or
if within Case III, received in the United Kingdom) after the date
of death are treated as income of the personal representatives and
not the income of the deceased. They are assessable on the personal
representatives under the same Cases of Schedule E as would have
applied to the employee or office holder. The emoluments will, of
course, all have been earned in periods before the date of death
even though they are assessable only on receipt.
If it is contended that an emolument cannot be attributed to
any particular period during the lifetime of the deceased employee
or office holder, see
SE40005.
So it is the place where duties were performed and the
residence and ordinary residence status of the employee when the
emoluments were earned which counts. The residence position of the
personal representatives at the time the emoluments are received
(or, for Case III, received in the United Kingdom) is irrelevant.
In cases where an employee or office holder has died the
employer will follow the instructions at page 16 of the Employers
Further Guide to PAYE. By following those instructions the employer
will account for tax in the following way
- where payments are made in the tax year in which the employee died the employer will calculate the tax due using the tax code in use before the employee died
- when payments are made in a tax year following that in which the employee died the employer will prepare a new deductions working sheet and will use code BR.
The statutory assessing position for emoluments received by
personal representatives after the death of an employee or office
holder is set out in
SE42390. In many cases, adopting the
statutory position would place an additional burden upon the
personal representatives and family of the deceased but would not
result in materially different overall tax liability. Sensible
administrative procedures should be used in this type of case.
Normally, you can take the pay and tax shown on the
deceased's P45 as received in the period before the date of death,
and follow
SE42410. However you should use the
strict basis of assessment, and follow
SE42390, in cases
- where it is requested or
- where you know that a substantial amount has been paid after the date of death. For these purposes a “substantial amount” means a sum in excess of £1,500.
The tax chargeable on the personal representatives is a debt due
from and payable out of the deceased's estate.
As regards
- the strict basis of assessment for the personal representatives of a deceased employee or office holder, see SE42390
- the time limit for assessments on the personal representatives, see SE42400
- the treatment of emoluments received up to the date of death, see SE42410.
