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Where Taxpayers and Advisers Meet

Paying income tax on earnings after death

dominoman
Posts:60
Joined:Fri Jan 15, 2016 6:41 pm
Paying income tax on earnings after death

Postby dominoman » Tue Dec 29, 2020 10:16 am

I understand that as an executor I need to fill in a tax return for earnings after death until the point the estate is distributed. But we can't distribute the estate until we've paid the taxes and then received clearance from HMRC. But the taxes will keep accruing until we've distributed so we are in an endless loop.

What do people do in this case?

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Paying income tax on earnings after death

Postby pawncob » Thu Dec 31, 2020 5:51 pm

The Execs deal with the estate and pay the IHT due.
Then they submit a tax return for the income and pay the tax due on that.
With a pinch of salt take what I say, but don't exceed your RDA

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Paying income tax on earnings after death

Postby AGoodman » Thu Jan 07, 2021 4:17 pm

You may be getting confused between IHT and income tax. You can get clearance for IHT (although it's now usually by less formal letter). For income tax, you just calculate to the relevant date and then pay it - often with a covering letter for the final period rather than a full return.


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