Income Tax During Estate Administration: What Executors Need to Know
From the date of death until the estate is fully administered, the estate is a separate taxpayer. Interest, rent, and dividends that accrue during this period must be declared and taxed — even if the estate will ultimately pass free of IHT.
Three Income Tax Obligations for Every Executor
Deceased's final return
Complete the deceased's personal SA100 for the period 6 April to date of death. Uses the deceased's existing UTR. Deadline: 31 January after the tax year end.
Estate's administration return
File SA900 for each tax year in which estate income exceeds £500. Requires a separate estate UTR. Income taxed at trust and estate rates (20%/8.75%).
R185 certificates to beneficiaries
Issue R185 certificates to residuary beneficiaries showing their share of estate income and tax paid. They use these on their own returns.
Income Tax Rates During Administration (2025/26)
| Income type | Rate payable by estate | Notes |
|---|---|---|
| Bank and savings interest | 20% (savings income basic rate) | No savings allowance for estates |
| Dividends | 8.75% (dividend basic rate) | From 2024/25; no dividend allowance for estates |
| Rental income | 20% | Property-related expenses deductible |
| Other income (trading, royalties) | 20% | Net of allowable expenses |
| No personal allowance | — | Estates do not get the £12,570 personal allowance |
| £500 concession | Nil | No return needed if total income under £500 in a tax year |
HMRC Administration: Timeline for Executors
Contact HMRC Bereavement Helpline (0300 200 3300) or use Tell Us Once to notify. Request the deceased's final tax position and any outstanding tax.
Determine whether the estate will have taxable income during administration. If so, register the estate for self-assessment with HMRC (Agent Dedicated Line or online) to obtain a separate estate UTR.
File form SA900 for the estate for each tax year in which estate income exceeds £500. Pay any tax due. Keep records of all income received and expenses paid.
Complete all outstanding SA900 returns. Obtain a clearance letter from HMRC (form IHT30) confirming no further IHT is outstanding. Issue R185 certificates to residuary beneficiaries.
Keep estate tax records for at least 6 years in case of HMRC enquiry.
Frequently Asked Questions
Is an estate a separate taxpayer during the administration period?
Yes. From the date of death until the estate is fully administered, the estate is treated as a separate legal entity for income tax purposes. The personal representatives (executors or administrators) are responsible for paying income tax on income that arises in the estate during this period. This income is taxed at the 'trust and estate' basic rates — 20% on savings income (interest), 8.75% on dividend income (from 2024/25), and 20% on other income (rent, trading income). The estate does not benefit from the personal allowance (£12,570 for 2025/26) — all income from the first pound is potentially taxable. However, HMRC has a practical concession: if total estate income (before expenses) does not exceed £500 in a tax year, no return needs to be filed and no tax is payable.
What income is taxable during the estate administration period?
Taxable income during the administration period includes: (1) Bank and savings interest on accounts held in the deceased's name or the estate's name — interest accruing after the date of death is estate income; (2) Rental income from any property held by the estate awaiting sale or transfer; (3) Dividend income from shares held in the estate (taxed at 8.75% basic rate); (4) Pension payments (rarely — pension providers should stop payments on death; any overpayments need to be repaid); (5) Business income if the estate continues to run a business pending sale or transfer. Income that arose before the date of death but was not received until after is income of the deceased — reported on the deceased's final personal tax return, not the estate's return.
What is the executor's low-income concession?
HMRC's extra-statutory concession (ESC A14) provides that if total estate income (before expenses and deductions) in a tax year does not exceed £500, the executor does not need to file a self-assessment return (SA900) for the estate, and no income tax is payable on that income. This concession applies separately to each tax year of the administration period. It is particularly useful for short administrations where only a small amount of bank interest accrues before the estate is distributed. If estate income exceeds £500 in any tax year, a full SA900 return must be filed for that year.
What is form SA900 and when must it be filed?
Form SA900 (Trust and Estate Tax Return) is the HMRC self-assessment return for estates in administration. Key facts: (1) It covers a tax year (6 April to 5 April); (2) Filing deadline: 31 January following the end of the tax year (31 January 2027 for the 2025/26 tax year) for online filing; 31 October for paper filing; (3) The executor registers the estate for self-assessment with HMRC and obtains a Unique Taxpayer Reference (UTR) for the estate — this is a separate UTR from the deceased's personal UTR; (4) One SA900 must be filed for each tax year in which estate income exceeds £500; (5) The executor should also complete the deceased's personal self-assessment return for the period from 6 April in the year of death to the date of death (using the deceased's existing UTR).
What are R185 certificates and when must executors issue them?
Form R185 (Estate Income) is a HMRC certificate that executors must issue to residuary beneficiaries when they receive a payment of estate income as part of their inheritance. The R185 shows: (1) The gross income received by the estate in respect of the beneficiary's share; (2) The income tax that the estate paid on that income; (3) The net amount distributed to the beneficiary. Beneficiaries use the R185 to declare the estate income on their own personal tax returns. A higher-rate taxpayer receiving estate income will have further tax to pay; a basic-rate taxpayer may have no further liability (the tax credit from the estate covers the basic-rate liability); a non-taxpayer may be able to reclaim the tax paid by the estate. R185 certificates must be issued when residuary income is distributed — typically at the end of the administration period. Residuary beneficiaries are entitled to receive an R185 for each tax year in which the estate had taxable income.
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