What is Self Assessment?
A system known as Self Assessment is utilized by HM Revenue and Customs (HMRC) for the collection of Income Tax. The tax is automatically deducted from savings, wages, and pensions. People who earn their income from other sources except these must file for Self Assessment tax return.
There are stipulated deadlines given for the process and when late, penalty charges may be applicable.
The process requires registering under different categories like self-employed, not self-employed, and partnership.
How to file a tax return for a deceased
If you are dealing with the tax affairs of someone who has passed away, then you must inform the HMRC about the case as soon as possible. This has to be done so that HMRC can let you know whether you would need to file a tax return on behalf of the deceased.
The following is the information that you will need to provide to the HMRC.
- National Insurance number of the deceased/ Unique Taxpayer Reference (UTR) of the deceased/ Full address of the deceased/ Pension provider or last employer’s name and address
- Date of death
- Name and address of the person that will be in charge of this process
The following are the documents that will be essential for the filing of the tax return of the deceased.
- Bank society passbooks
- Bank statements
- Dividend vouchers
- Pension payslips
- Confirmation of any state pension
- Statement of expenses paid by the employer
In addition to the above documents, you will also require the business records of the business or rented-out property, if any.
Submitting a return
One can register to submit online or send it by post to HMRC. There are deadlines assigned for each step so it is better to be updated about all the dates. You can also contact the HMRC helpline in case of any queries. If all of this seems like too much do on your own, you could also opt for outsourced accounting services.
The ‘administration period’
In the case where you are the administrator or executor of an estate, you will need to inform HMRC about the ‘administration period.’ This is the time frame between the day after the death and date on which the estate is settled or distributed. When you file a tax return for the administration period, fill in the trust and estate tax, which is separate from the return that is sent on behalf of the deceased, in case any of the following cases apply:
- The worth of the estate if more than £2.5 million on the day of the death
- The Income Tax and Capital Gains Tax to be paid for the administration period is more than £10,000
- The person died before 6/4/2016 and more than £250,000 per year was earned from the sale of the estate
- The person died before 6/4/2016 and more than £500,000 per year was earned from the sale of the estate
To register the estate, you will require the following information:
- A Government Gateway user ID
- A National Insurance number
A separate Government Gateway is to be made for the estate and cannot be the same as that of an individual. After the above steps are done, you will receive a UTR. Once you receive a UTR, you can fill the paper form SA900 and send it to HMRC. After they receive the form, they will let you know how much the estate owes.