Trusts and Inheritance Tax

Tax compliance for beneficiaries of estates

Produced by Tolley
  • 19 Oct 2021 23:13

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Tax compliance for beneficiaries of estates
  • Compliance issues for beneficiaries of estates
  • Provision of income tax information
  • Provision of capital gains information
  • Time limits for assessment

Tax compliance for beneficiaries of estates

Compliance issues for beneficiaries of estates

Beneficiaries of estates are often in a difficult position with regard to the payments and other bequests they receive from a deceased estate. They are reliant on the personal representatives (PRs) to provide them with the information they need to satisfy their tax compliance obligations. If they are not the PRs themselves, or do not have a close relationship with them, they are really in the dark as to whether they have the correct information. They are nevertheless responsible for the accuracy of their tax returns.

For some beneficiaries, the requirement to file a tax return or make a repayment claim will be an unfamiliar task. The PRs, or their advisers, should at least provide minimal guidance on what to do with the information provided to them.

Even where the beneficiary is used to engaging with personal tax matters, the receipt of a substantial bequest, is likely to be disruptive to the normal pattern of income and gains. It is advisable to have a dialogue with beneficiaries about the timing and distribution of substantial entitlements before making payments, so that they can review the effect they will have on their personal finances.

Details on the tax position of beneficiaries of estates are provided in the following guidance notes:

  1. Income tax for beneficiaries of estates

  2. Beneficiaries’ estate income ― minor interests

  3. Legatees’ capital gains tax position

This guidance note outlines the

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