Tax advice after bereavement

The last thing anyone wants after a bereavement is to be stung by the taxman.

Tax Help for Older People have produced a new guide that offers tax advice after bereavement. It aims to help steer a course through these choppy waters.

It provides clear illustrations of lots of variables in case studies that explore individuals’ tax situations so it’s easy to grasp the tax implications.

“The first thing is not to panic about the tax side of the aftermath of death. Whilst it should not be ignored, there are plenty of other aspects which should be tackled first and sooner, like informing banks and pension providers including the department for Work & Pensions (dWP) for the state pension and pension credit, or other state benefits so that accounts and pensions can be stopped or transferred to the partner. You, the personal representative, should then get started on the tax aspects so that you can obtain probate, distribute the estate and deal with the tax implications for the surviving partner or other beneficiaries. if you want a timescale, we suggest within a couple of months of the death.

“There seems to be a widespread belief that gifts and legacies are taxable on the recipients. This is very rarely the case. Just
occasionally the recipients of gifts made during the deceased’s lifetime might have to pay some tax on them if the death was
within seven years of the gift, but this would assume that the donor was really quite wealthy and had already made gifts of
more than the nil rate band. Any other tax due will have been settled by the estate before distribution and the bequests
themselves, are for basic rate taxpayers, neutral. Tax only arises when the recipients actually do something with the money
or assets, apart from rushing out and spending it. So if you are left £10,000, that is tax-free; but buy shares with it or put it into
a savings account, you will create a taxable income stream and perhaps ultimately a capital gain from the sale of the shares.”

Tax Help for Older People is an independent free tax advice service for over 60s on low income who can’t afford professional advice. Advice is given by phone, face to face meeting, post or email. Call 0845 601 3321 or 01308 488066 or email Alex.

We’d encourage you not to put off investigation of your tax situation till after a death. Final Fling has a network of independent professionals who can advise on legal and financial questions. Contact us.

 

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