Personal liability for inheritance?

[cpvh]

Hi All,

IF (Asking for a friend !!::^*>>))

A parent dies and leaves say £100Ks worth of (as yet unsold) house and 10K (spent) of "cash".

The estate has no tax to pay.

However, if there are two beneficiaries (children of the deceased), do they need to declare either 5K, or £55K on their annual return?

TIA

Chris

[spuorgelgoog]

No, as it's not income, it's capital.

However, the estate may have to pay

- capital gains tax on any increase in value of the house and cash between the date of death and the date of distribution

- income tax on any savings interest or divident income that arises between the date of death and the date of distribution

If the estate does not pay the taxes the executors may have a personal liability if they have distributed the estate before paying the creditors (including HMRC).

The beneficiaries will have to declare the house and cash if they are receiving any means-tested benefits from DWP which are affected.

Owain

[Robin]

a. assuming you mean annual self-assessment returns, no, not on their personal returns[1]

b. never trust a glib answer on the Internet on something important if it doesn't cite authority

c. see

(That's not a complete answer. But combine the fact there's no income tax to pay with the fact that there's nowhere on the return to declare the inheritances.) [1] an executor might have to file an *estate* return. But not in practice for such a small estate. Any tax due from the administration can be dealt with informally. See Or evaded :=(

[Tim Lamb]

Capital gains is one of the few taxes you escape by dying.