3. Taxation of Estates in Administration Flashcards
What is personal representative’s obligation regarding a deceased tax return?
PR must complete the deceased tax return for the period from April 6 to date of death
At the point of death, who assumes the liability of the deceased’s outstanding tax owed?
The estate
Until it is distributed, who does the income generated by assets within the estate belong to, and therefore who must pay the income tax?
PRs
What can PRs do instead of filing annual self-assessment returns on behalf of the estate?
Make an informal payment covering the total liability for the whole period of administration, with a single income tax and capital gains tax calculation
For an estate in administration, what is the income tax rate applicable to (1) non-savings income and interest and (2) dividends, irrespective of amount?
Basic rate for both so:
- Non-savings income/interest: 20%
- Dividends: 7.5%
For an estate in administration, are income tax free allowances, e.g. personal, personal savings, and dividend allowance, available?
No
If PRs took out a loan to pay IHT, what can be deducted from income?
Interest on the loan
In the context of CGT, for what periods will the PRs receive the annual exempt amount?
Year of death and the subsequent two years
For an estate in administration, what are the capital gains tax rates which apply?
Upper rate, so 20% for all assets except residential property which is 28%
Is a disposal by a PR to a beneficiary in settlement of a legacy under a will considered a disposal for capital gains tax purposes?
No
If a beneficiary is left an asset under a will, when are they deemed to have acquired the asset and at what valuation?
They are deemed to acquire the asset at the date of death for probate value, i.e. market value at the date of death.
(Value at time of distribution is irrelevant)
