Dealing with tax matters after the death of a relative can be tricky as well as upsetting. One thing you may be wondering about is if they still have a full personal allowance in the tax year of their death so that you are able to deal with their taxes and income for that year.

When someone dies then they are essentially entitled to the full personal allowance for that tax year, regardless of the point in time when they died.

So, whether someone dies in April 2020 or March 2021, they will be entitled to the full personal tax allowance for 2020/21 (£12,500) and this can be offset against any earnings from that tax year.

So it is likely that the earlier in the tax year that someone dies, the more likely there is to be a (bigger) tax rebate due, as the tax paid to date would assume that tax was being paid over the whole of the tax year.

Example

For example, if someone had an annual income of £24,500, lets assume for the sake of simplicity that they pay tax at a rate of 20%. They would therefore pay £200 a month in tax.

However, if they died at any time in the tax year before they had earned £12,500, then they would have paid tax that would now not be due. *

Notification

You will need to notify the Inland Revenue that the person has died. You can use the Tell US Once service to do this and this will enable the Inland Revenue to work out how much income tax is due or is due to be refunded.

You will need some details about the deceased person’s financial affairs including their National Insurance number and details of any income/benefits they were receiving.

*obviously this is a simple example and everyone's circumstances will be different.