Income Tax in the Year of Death UK (2026): The Deceased’s Final Tax Position

Yes — the income tax personal allowance is not pro-rated in the year of death. The deceased is entitled to the full personal allowance for the tax year in which they die, regardless of when in the tax year the death occurs. If someone dies on 7 April 2025 (near the start of the 2025/26 tax year), they are still entitled to the full £12,570 personal allowance for 2025/26 — just as they would be if they had lived all year. The same applies if they die on 4 April 2026 (near the end of the tax year): they get the full allowance. This is confirmed in HMRC's Trusts, Settlements and Estates Manual (TSEM): the personal allowance is given in full for the year of death. This means that in practice, a person with income below the personal allowance in the year of death will have no income tax liability for that year. Any income tax deducted at source (via PAYE on wages or pension, or 20% at source on savings interest above the personal savings allowance threshold) will be a recoverable overpayment claimable by the estate.

The executor (or administrator, if there is no will) is personally responsible for ensuring the deceased's final income tax affairs are settled with HMRC. This includes: (1) notifying HMRC of the death (via Tell Us Once or directly); (2) establishing what income the deceased received from 6 April to the date of death; (3) filing any outstanding self-assessment tax return (SA100) or ensuring HMRC carries out a PAYE reconciliation via a P800 notice; (4) paying any outstanding income tax from estate funds; (5) claiming any overpaid income tax on behalf of the estate. The executor can be personally liable for income tax if they distribute the estate without first settling the deceased's tax debts, so HMRC's income tax claim must be addressed before any distributions to beneficiaries. This is distinct from the executor's liability for income tax arising during the administration period (income earned after death from estate assets), which is a separate obligation.

All income received by the deceased from 6 April to the date of death must be included in the final income tax assessment for the year of death. The main income sources are: employment income (salary, bonuses, benefits in kind) received up to the date of death — usually already processed through PAYE; pension income (State Pension, occupational pension, drawdown) received up to the date of death; self-employment income (profits from trading for the period of the tax year up to cessation — the date of death); rental income received up to the date of death (including rent that was due before death even if paid after); savings interest credited to the deceased's account on or before the date of death; dividends received on or before the date of death. Income that arises or is received after the date of death — such as a dividend declared after death but on shares the deceased held, or rent received after death for a period before death — should be assessed carefully as to whether it falls in the deceased's final year or in the administration period.

The process depends on whether the deceased was within the PAYE system or self-assessment. For PAYE taxpayers (employees or pensioners with no other income to declare): HMRC will usually issue a P800 tax calculation after receiving notification of the death, reconciling the PAYE tax paid against the total liability for the year. If PAYE overpaid tax (common where the deceased dies early in the tax year and has not yet used their full personal allowance), HMRC will issue a P800 showing the refund and the executor can claim it using an R40 form or by writing to HMRC. For self-assessment taxpayers: the executor must file the final SA100 self-assessment return for the year of death. The deadline is 31 January following the end of the tax year in which the person died (for an online return) or 31 October for a paper return. If the deceased died in the 2025/26 tax year (between 6 April 2025 and 5 April 2026), the final SA100 is due by 31 January 2027 online. HMRC will issue a statement after the return is filed; any tax owed is payable from the estate, and any refund is paid to the executor for distribution to beneficiaries.

Yes — this is one of the most common income tax repayments claimed by executors. If the deceased was an employee or pensioner whose employer or pension provider deducted PAYE tax assuming they would receive income for the full tax year, but the person died partway through the year, the PAYE system will have collected more tax than was actually due — because the actual income for the year (from 6 April to the date of death) is lower than the projected full-year amount. The deceased's remaining personal allowance for the months after death is not used, meaning the effective income was lower and less tax was owed. Example: a pensioner receiving a £20,000 pension, dying on 31 October 2025 (7 months into the 2025/26 tax year), would have received approximately £11,667 in pension by the date of death; their income is below the personal allowance of £12,570 so no tax should have been owed — but PAYE may have deducted tax assuming a full year's income. The executor can claim the overpayment via form R40 or by prompting HMRC to issue a P800 reconciliation. The refund forms part of the estate.

The deceased's capital gains tax position for the tax year of death follows the same annual exempt amount rules as income tax — the full CGT annual exempt amount (AEA) applies for the year of death, not a pro-rated amount. For 2025/26, the AEA is £3,000. Any capital gains realised by the deceased before their death are included in their final CGT assessment for the year, reported on the final SA100 self-assessment return. Gains above the AEA are taxed at 18% (basic rate) or 24% (higher/additional rate) for residential property, and 18%/24% for other assets in 2025/26, depending on the deceased's taxable income in the year. The executor must ensure all asset disposals before the date of death are correctly reported. Any capital losses realised before death can be offset against gains in the same year; if losses exceed gains, the excess can be carried back to offset against gains in the three previous tax years (a useful loss carry-back provision available specifically on the death of a taxpayer under TCGA 1992 s.62). Assets passing on death get the CGT base cost uplift to probate value — pre-death gains are extinguished — but this uplift applies to the estate's future disposals, not to the deceased's final year return.

These are two completely separate income tax obligations that the executor must address: (1) Income tax for the year of death covers income received by the deceased personally from 6 April to the date of death — the final chapter of the deceased's own tax history. The executor files the deceased's final SA100 (or prompts HMRC's PAYE reconciliation), pays any tax owed from the estate, and claims any overpayment. This tax is owed by the deceased's estate as a debt of the deceased. (2) Income tax during the administration period covers income earned by estate assets after the date of death — rental income from a let property, dividends from shares not yet distributed to beneficiaries, interest on estate bank accounts. This income belongs to the estate and the personal representatives are taxable on it. The estate is treated as a separate taxable entity for this purpose; income tax is reported on the SA900 Trust and Estate Tax Return filed annually; rates are the basic rate (20%) on most income and the dividend ordinary rate (8.75%) on dividend income; the estate does not get a personal allowance for post-death administration income. Both obligations must be settled before the estate can be fully administered and assets distributed.