Notifying HMRC and Former Employers After Someone Dies

Dealing with a deceased person’s employment and tax affairs is one of the more involved parts of estate administration. The employer and HMRC need to be notified, final pay needs to be settled, and the National Insurance record needs to be correctly closed. This guide walks through each step in practical terms.

Notifying the Deceased’s Employer

If the deceased was employed at the time of their death, or had recently left employment, contacting their employer promptly is important. The person to contact is usually the HR department or payroll team. If you are unsure who to contact, start with any HR contact information from the deceased’s payslips or employment contract.

When you notify the employer, you should:

• Provide the date of death and your own contact details as the executor or next of kin
• Confirm your authority to deal with matters — if you are the executor, you can provide a copy of the grant of probate once obtained, but most employers will deal with next of kin informally in the first instance
• Ask specifically about final salary payments due (salary to the date of death), accrued but untaken holiday pay, and any outstanding expenses or bonuses
• Ask whether the deceased was enrolled in a group life insurance or death in service scheme — if so, ask for details of how to claim and who administers it

Final pay and holiday entitlement form part of the deceased’s estate and must be collected by the executor. The employer will usually make these payments once they have received an official death certificate and confirmation of who is administering the estate. Most employers are experienced in handling these situations with sensitivity and can provide guidance on their specific internal process.

National Insurance Contributions Stop at Death

National Insurance contributions cease from the date of death. No further NI liability arises after that point, regardless of what income the estate subsequently receives during the administration period (income received by the estate is subject to income tax but not NI).

The deceased’s NI record is effectively frozen at the date of death. This frozen record then feeds into calculations for:

• The State Pension entitlement the deceased had accrued — relevant for inherited State Pension calculations for a surviving spouse (see our State Pension inheritance guide)
• Any bereavement benefit calculations that depend on the deceased’s NI contributions (such as Bereavement Support Payment, which requires the deceased to have paid at least 25 weeks of NI contributions)

You do not need to take any specific action regarding the NI record itself — it is maintained by HMRC and updated automatically when the death is reported. If you have reason to believe the NI record is inaccurate (for example, if the deceased disputed the number of qualifying years on their State Pension forecast), see the section below on resolving NI record disputes.

The P45 on Death and HMRC PAYE Reconciliation

When an employee dies, the employer is required to process the death through their payroll system. As part of this, the employer issues a P45 for the deceased, showing earnings and tax deducted in the tax year up to the date of death. The employer submits the final real-time payroll information (RTI submission) to HMRC through the normal payroll process.

The executor should request a copy of the P45 from the employer, as it will be needed when completing the deceased’s final Self Assessment tax return (if they were in Self Assessment) or when HMRC reviews the PAYE position.

After the death:

• HMRC will carry out a PAYE reconciliation for the tax year in which the death occurred. If the deceased paid too much tax, HMRC will issue a repayment — this forms part of the estate
• If there is an underpayment of tax, HMRC will raise a demand for the outstanding amount — this is a debt of the estate and must be paid before the estate is distributed to beneficiaries
• HMRC typically carries out this reconciliation within 6 to 12 months of the end of the tax year in which the death occurred

If the deceased was not in Self Assessment and had no complex tax affairs, the executor’s main task is simply to ensure HMRC has been notified (via Tell Us Once) and to wait for any PAYE reconciliation notice. HMRC will write to the address on file, so make sure post is being redirected from the deceased’s former address if necessary.

Self-Employed Deceased: Class 2 and Class 4 NI Contributions

If the deceased was self-employed at the time of their death, there may be outstanding National Insurance contributions to consider:

• Class 2 NI: From 6 April 2024, Class 2 NI contributions for self-employed people were effectively abolished for most people. Those with profits above the Small Profits Threshold automatically receive NI credits without payment. If the deceased had Class 2 NI registered as outstanding for earlier years, this should be reviewed as part of finalising the Self Assessment return.
• Class 4 NI: Class 4 contributions are based on self-employed profits and are calculated and collected through the Self Assessment system. The final tax return for the year of death will include a Class 4 NI calculation for the period from 6 April to the date of death. This is based on profits earned in that period and is payable by the estate in the same way as income tax.

Class 4 NI stops accruing from the date of death — the calculation in the final return covers only the period from the start of the tax year to the date of death. Any income arising from the business after the death (which continues to accrue during the administration period) is subject to income tax but not Class 4 NI.

If the deceased had not yet filed their previous year’s Self Assessment return, the executor is responsible for completing and filing this, and for paying any tax and NI shown as due.

Resolving Outstanding NI Record Disputes

If the deceased had an active dispute with HMRC’s NI Contributions Office about their State Pension record — for example, if they had applied for a State Pension forecast showing fewer qualifying years than expected, or if they had previously been advised to make voluntary Class 3 NI contributions to fill gaps — the executor should write to HMRC to notify them of the death and request that any outstanding dispute is resolved.

This matters because:

• A surviving spouse may be entitled to inherit some of the deceased’s State Pension entitlement, and the amount will depend on the accuracy of the NI record
• If voluntary NI contributions were paid but not yet credited, the estate may need to confirm these were received and applied
• If the deceased overpaid voluntary contributions, a refund may be due to the estate

Contact HMRC National Insurance Contributions and Employer Office (NICO) in writing, quoting the deceased’s NI number and the nature of the outstanding matter. The address is: HMRC National Insurance Contributions and Employer Office, Benton Park View, Newcastle upon Tyne, NE98 1ZZ. Allow several weeks for a response.