Dealing with the estate of someone who's died

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1. Overview

As a personal representative (an executor or administrator) you’re legally responsible for the money, property and possessions of the person who died (the ‘estate’s assets’).

You’re responsible for the assets from the date of death until the date everything has been passed on to the beneficiaries. This is known as the ‘administration period’.

You may have to apply for probate before you can deal with some assets.

During the administration period you may have to:

  • pay any debts left by the person who died
  • sell assets such as properties or shares
  • pay Income Tax on things like rental income from property, profits from a business or interest from investments
  • pay Capital Gains Tax on profits from selling shares, investments or property
  • report the estate value, income and tax liability to HM Revenue and Customs

You can get professional legal advice and help, such as from a solicitor, to deal with any estate. You should consider this if the estate has a lot of assets or includes things like trusts.

This guide is also available in Welsh (Cymraeg).

If you’re dealing with the estate with someone else

If you’re not the only personal representative you should agree with the others:

  • where to hold financial assets - you can set up a bank account known as an ‘executorship account’ if needed
  • rules on making withdrawals or payments from any accounts connected to the estate
  • what assets you need to sell and when

2. Settling debts and taxes

You must pay any debts and settle the taxes for the person who died. This includes:

HM Revenue and Customs (HMRC) will tell you what taxes are owed or if any tax refunds are due if you use the Tell Us Once service.

Place a notice in The Gazette giving any creditors 2 months to claim anything they’re owed. Do not distribute the estate’s assets until the 2 months is up. If you do and the estate then cannot afford to pay a debt, you may have to pay it yourself.

Other taxes you might need to pay

You must also check if you need to:

3. Managing and selling assets

You may have to pay taxes for the estate if there is any new income while you’re dealing with it, for example profits from selling things like shares or property, or dividends from investments.

Selling shares or property

If you sell shares, investments or property that belong to the estate you may have to pay Capital Gains Tax on them if either:

  • they’ve gone up in value since the person died
  • they’ve gone up in value since being valued for Inheritance Tax

You do not pay Capital Gains Tax from the estate if you transfer assets directly to a beneficiary, for example property.

Read guidance on:

If you owe Capital Gains Tax on residential property you usually have to report this within 60 days.

If you sell land or property you must also update the property register with HM Land Registry.

Savings, dividends or other income

Some assets can continue to generate income after the death until you transfer or sell them. This could include:

  • rental income from property
  • profits and payments from the person who died’s trade or business
  • interest or dividend payments on savings, shares and other investments

You must work out and pay Income Tax on the full amount of income the estate receives between the day after the death and the date everything has been distributed.

Estates do not get any allowances on savings, income or dividends. Estates pay tax at the basic rates of 8.75% on dividends and 20% on any other income.

4. Reporting an estate’s income to HMRC

You may need to send information to HM Revenue and Customs (HMRC) about the estate’s income from the day after the death until the date everything has been passed on to beneficiaries (the ‘administration period’).

What you need to send depends on:

  • the value of the estate
  • how much income it generated during this time
  • if there was any tax to pay

When you do not need to report the estate

Up to 5 April 2024, if the only income the estate received during the administration period was from bank account interest which was less than £500, you do not need to report the estate to HMRC.

From 6 April 2024, if the estate’s income from any sources is less than £500, you do not need to report the estate to HMRC.

The £500 tax-free amount applies: 

  • for every tax year of the administration period, but you cannot carry over unused amounts from one year to the next
  • to all types of income, except ISAs, which continue to be exempt from Income Tax or Capital Gains until the estate is closed or up to 3 years after the person’s death

Reporting on ‘simple’ estates

Report tax owed in the administration period simply by writing to HMRC (known as ‘informal arrangements’) if all of the following apply:

  • the estate was valued at less than £2.5 million when the person died
  • the total Income Tax and Capital Gains Tax due is less than £10,000
  • you did not sell more than £500,000 worth of assets in any single tax year during the administration period

To report the estate send a letter to HMRC at the end of the administration period, including:

  • your name, address and phone number
  • the name, address, National Insurance number, and Unique Taxpayer Reference (UTR) of the person who died
  • any Income Tax and Capital Gains Tax still due for the whole administration period
  • any Income Tax and Capital Gains Tax you have reported and paid during the administration period, for example if you sold property

Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom

HMRC will then send you details on how to pay any tax the estate owes.

Reporting on ‘complex’ estates

If you cannot use informal arrangements you must register the estate online and send a Self Assessment tax return for the estate.

There are different processes for completing a Self Assessment tax return for income earned before the death or an Inheritance Tax return.

You must register by 5 October after the tax year you’re sending a return for.

For example, to send a return for the 2023 to 2024 tax year (ending 5 April 2024) you must register by 5 October 2024.

To register an estate you’ll need:

  • to make a Government Gateway account as an ‘Organisation’ - you can create this before you sign in for the first time
  • an email address
  • your details, including your National Insurance number or passport number
  • the details of the person who died, including their National Insurance number

You need a separate Government Gateway user ID for each estate you register.

If you’re an agent, you’ll need to use your agent services account. You’ll need permission from the personal representative to access the estate details.

Register an estate online.

Once you register, you can manage information about the estate.

Sign in to your account to:

  • update your details
  • update the estate’s details
  • appoint an agent
  • close the estate once it has been distributed

After you’ve registered an estate

HMRC will send you a UTR for the estate within 15 working days. Use this to either:

You must pay any tax due by the next 31 January following the tax year in your return (the same deadline as for sending a return online).

5. Distributing the estate

Once you have paid any debts and taxes, or you are sure the estate has enough money to do so, distribute the estate according to:

You may have to pay any remaining debts and tax bills yourself if you distribute the estate and do not keep enough money or assets in the estate to pay them.

If you paid tax on any income during the administration period, give anyone receiving that income a completed statement of income from estates form.

There is guidance for beneficiaries about tax on property, money and shares they inherit.

If you distribute property

If you are passing on a property you must update the property register with HM Land Registry.

Prepare final accounts

Once all the estate is distributed you can prepare the final estate accounts. These should be approved and signed by you and the main beneficiaries.