Dealing with the tax affairs of the deceased step by step

Step 1: Contact the Tax Office

One of the first things that you have to do as the personal representative is to contact HM Revenues & Customs (HRMC) as soon as possible. You will be given certain forms and instructions for filling them out. Make sure to have the deceased’s full name, address and NI Number on hand.

Step 2: Filling in the Tax Forms

If the person paid their tax through PAYE – you have to fill in form R27 (Potential Repayment to the estate form) either partially or fully.

If the person paid tax through Self-Assessment – you will have to fill in form R27 and a Self-Assessment form.

Form R27 is used to calculate if any tax is owed or rebate due. The form will require information about the person’s income and capital gains.

The Self-Assessment tax return form is meant to support form R27 and will mainly ask for information about the person’s capital gains, student loans and tax rebates if applicable.

Form R40 is used for claiming tax rebates if they are due.

Income Tax Allowance: the deceased will get their full tax allowance for the year of their death, as well as any blind person’s and married couples allowance if applicable.

Step 3: Contacting the Bank & Building Society

The banks and building societies need to be informed of the account holder’s death as soon as possible, to avoid accruing tax on the interest and therefore the estate.

Step 4: National Insurance

If the deceased was employed, no National Insurance contributions will be due after the date of death. If the deceased was self-employed, you have to contact the HMRC and cancel any standing orders for Class 2 contributions.

Step 5: Capital Gains Tax and Inheritance Tax

Whenever money is made from selling property or possessions of the deceased, you have to pay Capital Gains Tax. If you transfer the assets to the beneficiary under the conditions of the will or rules of intestacy (no will), no Capital Gains Tax will be payable on it by you. Find out the details from HMRC as you may not need to fill in the Self-Assessment tax return.

Before doing probate, you will need to at least partially pay the Inheritance Tax as the personal representative. Inheritance Tax applies to the estate left behind by the deceased if it is above a certain value (after exemptions).