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Tax issues before and after death

20 February 2018 / Paddy Millard
Issue: 4636 / Categories: Comment & Analysis
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Death and taxes

KEY POINTS

  • Surviving partners may not be well informed about their deceased partner’s income.
  • HMRC tends to rely on real-time information for assessable income.
  • Allowances may be duplicated.
  • The Revenue should rethink its approach to bereavement to ensure it obtains accurate information.

Until 2015 HMRC used two forms to establish the tax liability on death. The R27 (withdrawn in October 2014) was a request for information on the income and tax paid of the deceased up to the day of death. The P161(W) followed that asking for the new income sources of the surviving spouse since these frequently changed when the survivor inherited the deceased’s income (this form was withdrawn in September 2015).

Using the information provided HMRC could calculate any underpayment or overpayment of tax by the deceased and the new tax...

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