Tax returns often need to be filed for sources of income earned outside of the PAYE system to ensure the appropriate tax is paid. After someone has died, the executor of their estate is responsible for organising any outstanding financial issues, which may include filing a tax return for income earned in the most recent tax year and perhaps in previous years. It's first important to check if there are any outstanding tax issues to resolve before taking care of the paperwork.
Finding out tax information
The first step to take is to find out whether there are any outstanding tax issues that you need to deal with. HMRC will be able to provide information about what information they require, including which tax years for which a return is needed. HMRC has a bereavement service that is designed to provide assistance for this situation. They can tell you what information is outstanding for self-assessment, as well as confirm any taxable figures for someone who was employed, retired, or in receipt of benefits when they died.
Identifying sources of income
Finding out the sources of income that the deceased had is one of the important steps to find out if you need to file a tax return. HMRC can provide you with some information, but it's also necessary to look through the paperwork belonging to the deceased so that you can get a full picture of their financial affairs. If they have an accountant or financial manager, they may be able to help.
Do you need to file a self-assessment tax return?
A self-assessment tax return isn't always required. When you contact HMRC (or use the Tell Us Once service) to inform them of the death, they will let you know if a return is needed and send a form and letter with instructions. If you don't need to complete a tax return, the tax affairs will be resolved through a P800 tax calculation or Simple Assessment.
Filling in and sending a return
You will need various paperwork and information to help you fill out the self-assessment tax return. This will include bank statements, dividend vouchers, work or pension payslips, and any other information relating to their savings, investments, and income. HMRC's Bereavement helpline can provide assistance if you need help with completing the return.
The tax return should be sent by post and must reach HMRC by the date given in the letter. If you need help to fill in the return, you can hire an accountant or another financial professional to help you. This can make it much easier, especially if the deceased's finances are complicated.
You may also need to send an estate tax return for the administration period. This depends on factors such as the total tax due during the administration period and the value of the estate. To file an estate tax return, you need to register the estate online.
The tax return must be mailed to the HMRC by the date specified in the letter. If you need help filling out a declaration form, you can hire an accountant or other financial professional. This can make it easier, especially if the deceased's financial situation is complicated.
If you need help with filing a tax return for a deceased person, get professional assistance from a financial expert to make the process easier.