Income Tax and CGT Flashcards
Who is responsible for paying income tax and CGT of deceased?
The PR.
When is income tax and CGT payable by PR?
During the administration period.
What are the tax possibilities after death?
Deceased may owe tax or be due a refund.
What is CGT payable on?
Gains from selling estate assets.
What is income tax payable on?
Any income received during administration.
What must PR submit for deceased?
A tax return.
What period does the deceased’s tax return cover?
6 April to date of death.
Are tax liabilities an estate expense?
Yes, they are deductible for IHT.
Are tax refunds an estate asset?
Yes, and are included in IHT valuation.
Types of income PR must account for?
Untaxed income before death, income for pre-death periods, bank interest.
Examples of income post-death but for pre-death periods?
Unpaid rent and dividends declared before death.
Bank interest treatment rules?
Before death = taxed as income; after death = taxed as PRs income.
Is death a disposal for CGT?
No.
What is tax-free uplift for CGT?
Asset value reset at date of death; lifetime gains are wiped out.
What must PR consider for CGT?
Disposals made before death.
When might income tax apply?
If estate asset generates income before distribution.
Estate income sources?
Bank interest, share dividends, rent from property.
Estate income tax rate?
Basic rate.
Does deceased get a personal allowance?
No.
How is income post-distribution taxed?
As the beneficiary’s income.
What is Form R185?
Given to beneficiaries to claim tax refunds on estate income.
When must PR report to HMRC on estate income?
If income exceeds £500 per tax year.
When is income tax not payable?
If income is less than £500 per tax year.
Do both £2,000 and £50 sources need to be reported?
No, only the one over £500 (the £2,000).
