All Tax Work Carried Out with Co-op's Probate Complete Service

04 May 2018

Probate can require a significant amount of complex tax work to be carried out. With our fixed fee Probate Complete Service, we deal with Inheritance Tax, Income Tax and Capital Gains Tax matters, and we deal directly with HM Revenue & Customs (HMRC) on your behalf.

The following tax work is included in the fixed fee, which we agree with you before any work starts:

  • Finalising the deceased’s Income Tax position from the 6th April to the date of death and dealing with Income Tax during the administration of the Estate
  • Finalising the deceased’s Capital Gains Tax position from the 6th April to the date of death and dealing with Capital Gains Tax during the administration of the Estate
  • Inheritance Tax for the Estate

Unlike Co-op Legal Services, some other Probate providers and banks will charge additional fees for each type of tax return to be dealt with.

Once we have provided you with a written quote for the agreed work to be done that price will not change, unless the original information we are given is shown to be incorrect or circumstances change.

Calculating How Much Tax Is Owed

Calculating how much tax will need to be paid can be complicated. The way in which this is calculated differs for each type of tax.

Income Tax will need to be calculated for the year in which the deceased died. This can usually be done by submitting an income tax return either online or by post, if HMRC require a return. Sometimes when assets such as shares are sold for a significant profit, particularly during the Estate administration, Capital Gains Tax may need to be paid.

For Inheritance Tax, there are a number of different factors that will need to be taken into consideration when calculating how much tax is owed (if any). These include who will be inheriting from the Estate, how much the Estate is worth and whether the deceased person was married to someone who died before them.

Our Probate Specialists are experts in identifying the tax liability of an Estate and will work with HMRC if needed to calculate the total value of tax owed. A recent case study demonstrates how Probate Solicitor, Kate Rutherford, was required to predict the value of future royalties that would be received as income by the Estate of a deceased actress.

In order to calculate how much tax was owed by the Estate, Kate needed to predict the value of future royalties income as accurately as possible. Kate and HMRC worked closely together to develop a formula which predicted the future royalties income. HMRC were satisfied with the figure reached and the appropriate tax was paid.

Identifying and Claiming Tax Reliefs or Exemptions

With our Probate Complete Service, our Probate Specialists will also ensure that any tax reliefs that the Estate is eligible for are utilised and that any tax exemptions are also applied.

This would include transferring any unused Nil Rate Band allowance from a pre-deceased spouse. It would also mean that we would identify any beneficiaries who are exempt from Inheritance Tax and adjust the Inheritance Tax calculation accordingly as well as make use of the Resident Nil Rate Band if the deceased’s main residence was being passed to a direct descendant.

Dealing with HM Revenue & Customs

We will correspond with HM Revenue & Customs on your behalf for all Inheritance Tax, Income Tax and Capital Gains Tax matters relating to the Estate.

We will complete and submit all of the necessary forms such as:

  • The appropriate Inheritance Tax form (either IHT 205 or IHT 400 depending on whether Inheritance Tax is owed)
  • The Income Tax return for the tax year that was running up until the date of death, where needed
  • The Capital Gains Tax return, if this is required.

If tax returns are outstanding for previous tax years, then we can also normally deal with these but do note that this will incur an additional cost.

In addition, if any initial values are later found to be incorrect and a corrective account needs to be submitted as a result, then we will also prepare and send this to HM Revenue & Customs.

Paying Tax Owed within the Deadlines

Inheritance Tax needs to be paid by the end of the 6th month after the date of death and additional charges may be applied if this deadline is missed. Our Probate Specialists can ensure that any Inheritance Tax and other taxes are paid within the required deadlines, providing that sufficient Estate funds are available.

Co-op Legal Services is the largest provider of Probate and Estate administration services in England and Wales, and trusted to deal with over £1.3 billion in Estates annually.

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