The Lemon Fool

There is a more detailed version of this post in the Taxes area, but the legal aspect can be summarised thus:
An executor has some flexibility in arranging when a deceased’s estate is wound up. If the estate has investments that pay annual interest, choosing a windup date such that the estate gets the interest (and is then liable to tax at 20%) rather than the subsequent legatees may reduce their overall tax take.
Is this legal?

stewamax wrote:There is a more detailed version of this post in the Taxes area, but the legal aspect can be summarised thus:
An executor has some flexibility in arranging when a deceased’s estate is wound up. If the estate has investments that pay annual interest, choosing a windup date such that the estate gets the interest (and is then liable to tax at 20%) rather than the subsequent legatees may reduce their overall tax take.
Is this legal?

Doesn't make any difference as the residual beneficiaries will be taxed on the estate income in the end. The executor has to give them a form R185 (Estate) which shows their share of the estate income (and the 20% tax paid). They have to include this in their SA return and will either pay more tax if their marginal tax rate is more than 20% or claim tax back if less than 20%.

Perfect reply.
I suspected that HMRC would have covered this somewhere as there was obviously a revenue loophole that could otherwise be exploited - not that I would do such a thing...