HMRC and Inheritance

[Borntobeamum]

I’ll try and condense this as much as I can!

I lost my parents recently. They had approximately £70,000 held In an account with The Prudential.

I did all the paperwork and withdrew the money - it took months - into my bank account. I am retired and don’t earn anything. My husband works and until I can claim my state pension, I don’t pay any tax.

The money was then divided up as per my parents wills into shares. I and my brother got 5/12th’s each and the remaining 2/12th’s Was the further divided up between grandchildren.

What I’d like to know is what I do with the HMRC as The Pru sent a Chargeable Event Certificate which I need to disclose in my self Assessment tax return.

This is where I’m confused as I’m not self employed and no longer complet a tax return as I am no employed and therefore dont pay tax.

Can anyone advise me of how I go on about deal with this please?

Many thanks.

When you say money was with 'The Pru' do mean it was some sort of investment/insurance product?

When I had a similar chargeable event certificate it was included on the tax return submitted for my deceased mother.

It should have been on the deceased tax return .

It sounds like your parents held some sort of insurance policy or investment product which has produced a gain (on which tax may be payable). This is the chargeable event. But you don't pay the tax - it should be dealt with through the policy holder's tax return (even when deceased). Call HMRC for advice if you are not sure.

If you have already distributed the money, you may need to recover some if tax is owed. The tax payable will depend on the size of the gain and the policy holder's tax position (were they working/low rate income tax payer/high rate etc)

The paperwork said Lives assured Mrs Borntobeamum and Brother of Borntobeamum.
It had originally been over 100k but I’d had to withdraw to pay care home fees.

It's her chargeable event not yours, for capital gains tax purposes. She may not have hit the threshold for anything to be owed but it still has to be declared

Depending on specifics, the chargeable event gain goes on their/their estates' tax returns not yours.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/bereavement-and-deceased-estate

This sounds like an investment bond. These are not taken into account when assessing care home fees and need not have been used for care fees.

As already mentioned, on death the total gain will become a chargeable event. Relief is available but the calculations are fairly complex. Onshore bond gains within the basic rate band do not attract further tax.

Yes just as “messybutfun” says. Recently went through this with mum’s estate as she had 4 of these investment bonds that she hadn’t touched since she first invested in them in the early 90’s (one was with the Prudential). If I’d known about the implications I would have encouraged her to gradually divest herself of them and put the funds in simpler, more tax efficient products. We had to get an accountant to sort it for us in the end as the four added together took my mum’s income for the year over the basic rate threshold.

Many thanks for all your help x x

You need to get legal and tax advice on this. Anyone can complete a tax return, but you need to know exactly who needs to declare it and how. The executors should have dealt with this before the money was divided in case any tax was due from the estate.

The gain may well be covered by the annual allowances