The deceased's tax position
Produced in partnership with Donald Pearce-Crump (Produced by Tolley)
The deceased's tax position

The following Private Client guidance note Produced in partnership with Donald Pearce-Crump (Produced by Tolley) provides comprehensive and up to date legal information covering:

  • The deceased's tax position
  • Income tax
  • Working out taxable income
  • Computation of income tax
  • Capital gains tax

Income tax

When an individual dies, their estate is liable to income tax on the income that arises in the period starting on 6 April before death and ending with the date of death. There is also liability to capital gains tax on the disposal of any of their property in that period. This Practice Note describes how to quantify that income and calculate the tax due.

Working out taxable income

Generally speaking, taxable income in the year of death is calculated in the same way as for any other tax year. However, there are a number of special rules that have to be considered and these relate mainly to the time at which income and deductions are taken into account. This is important for deciding whether the income arising is that of the deceased or that of their personal representatives (PRs), who are charged to income tax in a different way from the deceased.

For all sources of income, the usual basis of assessment rules apply and most questions about calculation and recognition can be resolved by reference to them. A number of sources of income are considered below. These highlight rules that are in point only because the taxpayer has died.

Earnings

Earnings are assessed on a receipts basis. So if earnings are received (or remitted to the