Deceased Estate

[Bazile]

I'm the executor of my father's estate .

He had an investment bond  in  a company .

They sent me a cheque for the payment of the bond  with the tax deducted on the interest payment earned  

However they made the cheque payable to me directly which I paid into my bank account , so the cheque didn't go out of date .

Do I have to pay income tax on the amount ?

[Buenchico]

No, because it's not 'income' (as defined by HMRC).  It's simply part of your father's estate.  It will, however, count towards the total value of that estate when calculating how much (if any) Inheritance Tax is due.

[Bazile]

The cheque sent was for the bond plus the interest . So two things . 

Does that make any difference ?

[Buenchico]

It's still all part of your father's estate.  So I can't see that it makes any difference.

[barry1010]

Out of interest, I put your question in Co-Pilot, Microsoft's AI.  I have no idea if the answer is right or not, but it may be a discussion point 

Regarding the investment bond payment, the key points to consider are:

Interest Earned: The interest earned on the bond is typically subject to income tax. Since the company already deducted tax on the interest, this might be reflected in the amount you received1.

Chargeable Gain: If the bond was surrendered (cashed in), any gain (the difference between the amount invested and the amount received) is treated as savings income and taxed at your marginal rate2.

Personal Circumstances: The tax you owe depends on your personal tax situation. You may need to report the full amount of the gain on your tax return3.

Given the cheque was made payable to you directly, it’s important to ensure that the tax implications are correctly handled. It might be beneficial to consult with a tax advisor or accountant to get specific advice tailored to your situation.

[Bazile]

Chris -When I said the cheque was made payable directly to me - I meant it was made payable directly  in my name - not to the 'executor '

So I still don't have to declare it to  HMRC ?

[Buenchico]

^^^ Only as part of your father's estate (for Inheritance Tax purposes, if relevant), not as part of your income.  The payee's name on the cheque is irrelevant.  

[Bazile]

Thanks 

[Old_Geezer]

Beware the taxmen. Even if it is part of the estate expect them to query what it is you haven't told them about when they spot what appears to be a personal gain. Don't expect them to tell you what they're querying about because it's much more fun for them to let you worry about it for days until you spot what it might be that they are confused about.

[ubasses]

Buenchicohas given you the right answers.  If you are doing probate include the full amount in gross assets and show the tax in debts section, even though it has been deducted.

If you are doing probate, good luck, I have just received an email advising me that mine is on its way back to me after 8 months. It was a simple estate, all assets to the widow, but at least is was better than an acquaintance who waited 18 months.