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Taxation at Bereavement

The death of a spouse or civil partner is always a difficult time. It is hard sometimes to know what to do about tax when someone dies particularly as to whether any special rules apply.

We have tried to set out some of the areas where problems can occur.

Do you need to contact HMRC?

If you have an executor or executrix - a person appointed by the will who will be dealing with the estate for you (quite often a solicitor or family friend) he or she should notify HMRC of the death.

Alternatively if you are the executor or executrix, you should either write to HMRC to let them know or telephone on 0300 200 3300 say 'bereavement' when prompted and you should be directed to the correct team.

If, however, you used the ‘Tell Us Once’ service when registering the death and opted at that time for HMRC to be notified, you should not need to contact HMRC again. If HMRC need you to complete any forms they should let you know.

If my spouse or civil partner dies - will this affect my state pension?

The additional state pension (sometimes referred to as state second pension or the state earnings-related pension scheme, S2P or SERPs) is an add-on to the basic state pension and is based on the level of National Insurance contributions made.

You may be able to inherit your late spouse or civil partner's entitlement to this type of pension. The New State Pension introduced on 6 April 2016 changed how this works but we understand that there are transitional arrangements for certain women who paid reduced-rate NI contributions, and for people who are widowed.

Are there any special income tax rules that apply?

When your husband or wife or civil partner dies the tax year is divided into two parts - up to the date of death and from the date of death.

Before the date of the death

If your spouse or civil partner normally completed a tax return or repayment claim, it will probably be necessary to complete one for the period to the date of death to include all income paid in the period before that date. If not HMRC should write to you or the executor explaining that they will reconcile your partners record and let you know if there is any tax to be refunded to, or paid from the estate. If HMRC believe the record balances you may just receive a letter. Ask HMRC for the calculation so that you can check the figures.

Any tax due or repayable is worked out in the normal way, and a full personal allowance is available for the tax year of the death to set against income arising before the date of death.

A full married couple's allowance (MCA) is available in the year of death. If your late wife or civil partner has claimed all or part of the MCA, and their income to the date of death is insufficient to use it all, the balance can be transferred back to you.

If your husband (or civil partner) dies leaving a surplus MCA - you can use this against your income arising in the tax year both before and after the date of death.

The full marriage allowance is available in the year of death. If it is the transferor who has died the transferors tax is calculated using the reduced allowance and the recipients tax code is adjusted in the year following the death. If the recipient dies both benefit from their full allowance.

After the date of death

After the date of death, the responsibility for completing tax returns or repayment claims lies with the executors or in the case of someone dying intestate, with the administrator of the estate.

On income arising after the date of death, the rates of tax are:

2018/19, 2017/18 & 2016/17 (2015/16)

  • Savings income - 20% (20%)
  • Dividends - 7.5% (10%)
  • Rents from property - 20% (20%)

Personal allowances are not available to the executors after the date of death to set against post-death income.

The surviving spouse

Your income may have changed considerably and it is important that your tax codes are reassessed. If HMRC don't contact you, contact them on 0300 200 3300 to ask for your codes to be checked. Alternatively or contact us on 01308 488066 or use the 'contact us' link on this website.

Posted in: An introduction to the tax system