Income Tax During Estate Administration: What the Executor Must Do

What is the administration period?

The administration period begins on the date of death and ends when the executor has finalised all assets, paid all debts and tax, and is ready to distribute the estate to beneficiaries. There is no fixed duration — for straightforward estates it may be 6–12 months; for complex estates with property sales or disputes it may be several years.

During this period, the estate is treated as a "complex estate" or "simple estate" depending on the level of income and gross estate value — this determines whether a full SA900 is required or whether HMRC will accept informal reporting.

Income earned before death

Income earned before the date of death belongs to the deceased and must be reported on the deceased's final SA100 personal tax return — not the estate. The executor is responsible for filing this final return on behalf of the deceased. HMRC must be notified of the death and will issue a final tax calculation.

Common pre-death income items include:

• Wages or salary up to the date of death
• State pension payments received before death
• Bank interest accrued before death
• Rental income up to the date of death
• Dividends paid before death

Any income tax overpaid by the deceased (e.g., through PAYE) is repayable to the estate. HMRC will issue a P800 calculation or, if a return is filed, a repayment. See our what to do after grant of probate guide for how tax refunds fit into the administration sequence.

Income earned during administration

Income arising after the date of death — while the estate is being administered — is estate income. The estate is taxed on this income, not the executor personally. Types of post-death income include:

• Bank interest: Interest earned on the deceased's accounts from the date of death until they are closed
• Rental income: Rent received from any property in the estate during administration
• Dividends: Dividends paid on shares or investment portfolios held in the estate
• Interest on gilts or bonds: Coupon payments received after death
• Estate account interest: Interest on the executor account

Tax rates during administration

During the administration period, the estate is taxed at basic rate:

• Bank and savings interest: 20% (basic rate)
• Rental income: 20% (basic rate)
• Dividends: 8.75% (dividend basic rate)

Estates do not benefit from the personal allowance, savings allowance, or dividend allowance that individuals receive. Every pound of estate income is taxable (subject to the £500 informal reporting threshold for simple estates — see below).

However, unlike trusts, estates are not subject to the 45% additional rate or 39.35% trust dividend rate during the administration period. This makes the administration period more tax-efficient than a discretionary trust.

Simple estates vs complex estates

HMRC distinguishes between simple and complex estates for income tax reporting purposes:

For estates that meet the simple estate criteria, HMRC accepts informal correspondence rather than requiring a full SA900. However, if income exceeds £500 in any tax year — even for a simple estate — HMRC must be notified. See our SA900 completion guide for the full return process.

The SA900 Trust and Estate Tax Return

The SA900 is the annual income tax return for estates (and trusts). The executor files one SA900 for each tax year (6 April to 5 April) in which the estate generates taxable income above the threshold. Key points:

• Who files it: The executor (personal representative) as agent for the estate
• Filing deadline: 31 January following the tax year (same as self-assessment); 31 October for paper returns
• Reference number: The estate will need a Unique Taxpayer Reference (UTR) — this is separate from the deceased's personal UTR and must be applied for from HMRC
• Payment deadline: 31 January following the tax year

The executor must register the estate with HMRC to obtain a UTR before filing the first SA900. This can be done online or by calling HMRC. Allow 4–6 weeks for registration.

Rental income during administration

If the estate includes a rental property, rental income during administration is significant. The estate pays income tax at 20% on net rental income (after allowable expenses). Allowable deductions include:

• Letting agent fees
• Maintenance and repairs (not improvements)
• Buildings insurance
• Mortgage interest (at basic rate, as per the current rules)
• Accountancy costs

Rental income should be reported on the SA900 property pages. For a simple estate, it may be reported informally if below the threshold. For selling the property, see our selling a probate property guide.

How income is passed to beneficiaries

When income is distributed to beneficiaries, they receive it net of basic rate tax already paid by the estate. The executor issues each beneficiary an R185 (Estate Income) form showing:

• The gross amount of income they are receiving
• The tax already deducted at source (20% for interest/rent)
• The net amount they actually receive

The beneficiary uses the R185 to complete their own tax return. If the beneficiary is a higher-rate taxpayer, they must pay additional tax on their share. If they are a basic-rate taxpayer, the tax is already settled. Non-taxpayers may be able to reclaim the tax deducted.

Interaction with inheritance tax

Income tax and inheritance tax are separate obligations. IHT is charged on the value of the estate at the date of death. Income tax is charged on income arising after death during administration. They do not overlap — there is no double taxation on the same amounts.

However, income received before death but not yet taxed (accrued income) is an asset of the estate for IHT purposes — and the liability to pay income tax on that accrued income is a deductible liability. See our inheritance tax guide for the full IHT picture.

Capital Gains Tax during administration

In addition to income tax, the estate may be liable to Capital Gains Tax on any gains realised when selling estate assets (e.g., shares, property) at above probate value. CGT during administration is a separate charge — see our CGT on inherited assets guide for full details.

For property sales, CGT must be reported and paid within 60 days of completion using HMRC's CGT on UK property service — this is separate from the SA900 income tax return.

Practical steps for the executor

1. Notify HMRC of the death — contact HMRC to inform them of the death and provide the deceased's NI number and UTR
2. File the deceased's final SA100 — for income earned up to the date of death
3. Register the estate — obtain a UTR for the estate from HMRC if income is likely to exceed £500 or the estate is complex
4. Keep records of all estate income — bank interest certificates, rent receipts, dividend vouchers
5. File SA900 returns annually — for each tax year in which the estate generates taxable income above the threshold
6. Issue R185 forms to beneficiaries — so they can report their income share on their own returns

For the full post-grant administration checklist, see our what to do after grant of probate guide and the estate administration checklist. For the broader probate process, see our complete UK probate guide 2026. For applying for probate, see our applying for probate guide. For post-administration tax on beneficiaries' receipts, see our post-administration tax guide. Farra can help — get started here.