Income and Capital Gains Tax Consideration

We will be happy to deal with finalising the deceased's tax affairs to the date of death unless this is dealt with by professional advisers who acted for the deceased prior to death.  Income tax and capital gains tax returns of the Personal Representatives are sometimes required to deal with the closure of the estate.

In respect of income tax, executors are obliged to account to the appropriate Inspector of Taxes for income received and for capital gains made during the period of the administration.  They also need to provide certain information to that Inspector for each residuary beneficiary who receives income from the estate.

The income which is received from an estate counts towards a beneficiary's total income for the purposes of calculating whether or not they pay income tax, and, if so, whether at the basic rate or the higher rate.  Under the present tax regime it is important for the executors to distribute income to the appropriate beneficiaries within the tax year in which it arises (if it is practicable to do so).  Failure to do this by accumulating income may cause bunching of a beneficiary's income in a given tax year, the risk of this occurring can in turn produce a risk of a beneficiary's existing income increasing and therefore incurring a higher rate tax liability.

A beneficiary who receives a payment of income, receives an income tax deduction certificate from us.