Topic

Questions

1.If the personal representatives receive bank savings interest of £5,000 and dividends of £400 how much income tax must they pay? 

Answer

£5,000 x 20% = £1,000

£400 x 7.5% = £30

Total tax to be paid = £1,030

2.The estate of the late Martha Brown has a value of £1M. The personal representatives receive a total amount of bank interest over the administration period of £10,000 and make capital gains of £10,000 (which are within their annual allowance for capital gains tax) following the sale of the deceased’s house for £450,000. Can the personal representatives use the informal method to notify the Inland Revenue and pay their liability to income tax? 

Answer:

Yes.  As the estate is worth less than £2.5m, the assets disposed of were worth less than £500k and the combined liability to income tax and capital gain tax is below £10,000