The Executor’s Guide to a Deceased Person’s Final Tax Return

Inheritance Tax and income tax are often confused by first-time executors, but they are two separate obligations, dealt with separately, and missing either one can leave the estate exposed. This guide covers the final tax return: the income tax position for the period up to the date of death, and for the estate itself while it is being administered.

Two different tax returns, not one

There are potentially two income tax returns to think about. The first covers the deceased’s own income from the start of the tax year up to the date of death. The second, only needed if the estate generates income of its own such as bank interest, dividends, or rent while it is being administered, covers the estate during the administration period.

Do you have to file a return for someone who has died?

Not automatically. If the deceased was not previously required to complete Self Assessment and their income in the year of death was straightforward, HMRC may be able to settle the position informally through its bereavement service without a full return. Where the deceased was already in Self Assessment, or had more complex income such as self-employment, rental property, or significant investment income, a final return is normally required covering income up to the date of death.

Deadlines

The final tax return generally follows the normal Self Assessment deadlines: 31 October for a paper return or 31 January following the end of the tax year for an online return. Because gathering the information needed after a death often takes longer than usual, it is worth notifying HMRC of the death promptly so any extension or informal arrangement can be discussed if the deadline is going to be tight.

Notifying HMRC

A death is usually reported to HMRC through the Tell Us Once service at the time the death is registered, which passes the information to HMRC among other government departments. Executors should still expect to deal with HMRC’s bereavement service directly for anything beyond that initial notification, including any final return and any tax owed or refund due.

The personal allowance still applies

The deceased’s personal allowance and tax bands apply in full for the tax year of death, even though they were only alive for part of it. This sometimes means a refund is due, particularly where tax was deducted at source from a pension or employment income right up to the date of death.

Income during the administration period

Once the estate itself starts earning income, such as interest on funds held pending distribution, that income is taxable on the estate, not on the deceased. Where the total income is modest, HMRC has informal arrangements for small estates that avoid the need for a full estate tax return. Larger or more complex estates, especially where a formal Deed of Variation is involved, are more likely to need a proper return covering the administration period.

This sits alongside, not instead of, the Inheritance Tax position. If you have not yet worked through the IHT valuation, see our guide to valuing an estate for Inheritance Tax. Executors also carry personal exposure if tax obligations are missed, which our guide on executor personal liability covers in more detail.

GOV.UK’s guidance on Self Assessment tax returns sets out the general filing rules and deadlines, and HMRC’s guidance on valuing the estate of someone who has died covers the wider reporting position executors need to work through.