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Where Taxpayers and Advisers Meet

Savings interest in administration

seasider1b
Posts:6
Joined:Fri Apr 01, 2022 12:43 pm
Savings interest in administration

Postby seasider1b » Fri Apr 01, 2022 12:55 pm

Doing my mother-in-law probate.

She has actually received £600 in savings interest during the period of administration, but £200 of that was accrued but not paid before her date of death. She would not have paid any tax on that money anyway because she died in June and it would be covered by her personal allowance for that year. In terms of IHT reporting I used the balance of the account including the accrued interest.

I think it is reasonable to deduct the £200 from the actual payment so that the amount arising in the admin period is only £400 so tax is £80 so no informal return required to HMRC.

Does anyone know if HMRC would agree with this treatment.

Grateful for any help particularly from practitioners.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Savings interest in administration

Postby maths » Mon Apr 04, 2022 8:57 pm

For IHT, any interest which accrued prior to death is treated as part of the deceased's estate for IHT purposes (in essence the £600 received after death needs to be apportioned to periods pre and post death).

For income tax, interest income is taxed when due and payable; so if the £600 was due and payable after death it is solely income of the administration period.

seasider1b
Posts:6
Joined:Fri Apr 01, 2022 12:43 pm

Re: Savings interest in administration

Postby seasider1b » Tue Apr 05, 2022 8:17 pm

Thanks for your help.

I feared that might be the situation!


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