Death of a spouse or civil partner
In this section, we tell you what you need to do in relation to tax matters if your spouse or civil partner dies. We have also tried to set out some of the common areas where problems can occur.
Do I need to contact HM Revenue & Customs?
If your spouse or civil partner made a will, they will have appointed an executor or personal representative. The executor may be you, or it may be a solicitor, another relative or family friend. The executor or personal representative should notify HM Revenue & Customs (HMRC) of the death. You can find the contact details for HMRC on the GOV.UK website.
If, however, you used the Tell Us Once service when registering the death and opted at that time for HMRC to be notified, you should not need to contact HMRC again. There is more information about Tell Us Once on GOV.UK.
If my spouse or civil partner dies will this affect my state pension?
If your spouse or civil partner dies, this may affect your state pension entitlement. In some situations, you may be able to claim more state pension. The rules for inheriting or increasing state pension from a spouse or civil partner are explained on GOV.UK.
Importantly, if you do get a new, or extra, state pension as a result of your spouse or civil partner’s death, you will need to make sure that HMRC are aware of the change so that your own tax position is correct. See ‘If my spouse or civil partner dies, will this affect my tax position?’ below.
You may also be entitled to any extra state pension your spouse or civil partner was entitled to because they put off claiming (deferred) it when they reached state pension age. There is more information on deferring the state pension in the ‘pensioners section’.
You may also be entitled to any extra state pension your spouse or civil partner was entitled to because they put off claiming (deferred) it when they reached state pension age. There is more information on deferring the state pension in the ‘pensioners and tax section’, and on how a state pension lump sum is taxed on death only available if the deceased reached state pension age before 6 April 2016).
If you are widowed you may also be able to claim bereavement benefits. There is more information in our section ‘what is the effect of death on state benefits and credits?’.
Yes, it is most likely that your tax position will change – especially if you look at your overall tax position as a household. Your late spouse or civil partner will have had a personal allowance to reduce the amount of tax they paid on their income. You have a personal allowance as well. So, between you, you could previously have had twice as much income as a household as you can now without paying tax.
This change can be particularly noticeable if your late spouse or civil partner was a pensioner and, on top of your own income, you now ‘inherit’ some element of extra private or state pension income.
Let’s say for instance that you had £13,000 of pension income in total before your spouse or civil partner’s death. In 2017/18, the personal allowance is £11,500, so you would only pay tax on £1,500 of your income. Your spouse or civil partner also has £13,000 of pension income, so again they paid tax on £1,500 of it. So together you have £26,000 income, and pay tax of £600 (£3,000 at 20%).
But if your spouse or civil partner died on 5 April 2017, and from 6 April 2017, you inherit half of their pension (£6,500) on top of your own pension, your total income will then be £19,500. After deducting your personal allowance of £11,500, you will pay tax on £8,000. So you now have £19,500 of income and pay tax of £1,600 (£8,000 @ 20%).
So, even though you may feel as though you have less income if you previously budgeted as a household, more tax is payable.
Other tax allowances
Up until your spouse or civil partner’s death, you may have claimed other allowances or transferred allowances between you which may change after death. For example, you may have claimed to transfer part of one of your personal allowances to the other (the ‘marriage allowance’). In that case, the last year of claim will be the year in which the death occurred. GOV.UK explains how personal allowances are calculated in the year of death.
Note, however, that if you did not claim the marriage allowance before their death, you cannot claim it after the death of your spouse or civil partner.
If one of you was born before 6 April 1935, you may have claimed the married couple’s allowance. More information on this, including what happens on death, is given in our pensioner section.
Pensions and benefits
If your spouse or civil partner dies, you may get extra money from pensions or state benefits for example. If you receive extra money, this may mean you have to pay more tax. There is a guide on GOV.UK explaining what income you must report to HMRC, and what income they should already know about. However, even if HMRC should know about changes to your income (such as an increase in state pension, or receipt of a spouse’s pension), sometimes the information does not get through, or errors can occur. So check your tax to make sure that all of your new sources of income are included.
If you do not complete a tax return each year, check your PAYE codes carefully and contact HMRC if there is anything you do not understand or if you think something is incorrect or missing. You may be able to do this online, if you set up your HMRC personal tax account.
You will only need to pay tax on your savings income if it exceeds your personal savings allowance, in which case you will have to notify HMRC of your liability yourself. For 2016/17 and later years, the bank or building society do not deduct tax at the basic rate but will always pay your savings interest gross.
Like the personal allowance situation noted above, this might be an issue to watch out for if you have inherited savings from your late spouse or civil partner that pay interest. Your personal savings allowance, if you are a basic rate taxpayer, allows you to receive up to £1,000 in a tax year without any tax being payable. Your spouse or civil partner would also have had a personal savings allowance, so – between the two of you – you may have been paying no tax on savings income. But once you start to receive the combined income in your sole name, you will need to double check that you are not due to pay tax, or whether the additional savings interest you have acquired is covered by (eg) the zero per cent starting rate on savings.
You may also find our web page ‘savings and tax' helpful.
If my spouse or civil partner dies will this affect my ISA?
On death of your spouse or civil partner, you have an additional ISA allowance equal to the value of your spouse or civil partner’s ISA savings at the date of their death. The additional allowance will not count towards your normal annual subscription limit.
You may not use the additional allowance to subscribe to a junior ISA.
To be eligible, you must have been living together at the time of your spouse or civil partner’s death. Living together means that you must not be separated by a court order, by a deed of separation, or as a matter of fact in circumstances in which the separation is likely to be permanent.
You must also be eligible to subscribe for an ISA in your own right – this means that you must be resident for tax purposes in the UK and must be aged 16 or over for a cash ISA (18 or over for a stocks and shares ISA). If you do not live in the UK, you must be a Crown servant, or the spouse or civil partner of a Crown servant.
Time limits also apply – normally you have to make a subscription to an ISA to use this additional allowance within three years of the date of death.
Are there any special income tax rules that apply?
When your spouse or civil partner dies, the income tax year is divided into two parts for the purposes of assessing their tax liability – up to the date of death and from the date of death.
For example, if your spouse or civil partner dies on 15 July 2017, the 2017/18 tax year is divided into the periods:
- Up to date of death – 6 April 2017 to 15 July 2017; and
- From the date of death – 16 July 2017 to 5 April 2018.
Up to the date of the death
If your spouse or civil partner normally completed a tax return or repayment claim, it will probably be necessary to complete one for the period to the date of death. This must include all income received in the tax year before that date. Normally the executor completes the tax return or repayment claim.
You or the executor should work out any tax due or repayable in the normal way.
Note that a full personal allowance is available for the tax year of the death to set against income arising before the date of death.
If you and your spouse or civil partner were eligible for the married couple's allowance (MCA), note that a full MCA is available in the year of death. There is more detail on how this works, including how the surplus allowance can be transferred, in the section ‘pensioners and tax’.
If your late spouse or civil partner has claimed all or part of the MCA, and their income to the date of death is insufficient to use it all, the balance can be transferred back to you.
If your spouse or civil partner dies leaving a surplus MCA, you can use this against your income arising in the tax year both before and after the date of death.
If you and your spouse or civil partner were eligible for the marriage allowance, the full transfer is available in the year of death, provided the claim was made before the death (claims after one of the couple has died are not permitted). GOV.UK explains the impact on both of your allowances.
If your spouse or civil partner was claiming blind person’s allowance (BPA) and they did not have enough income to use up the allowance, you can ask HMRC to transfer the rest of the BPA for that tax year to you. There is more information on the BPA and how to transfer it in the ‘tax basics section’ of this website.
From the date of death
After the date of death, the responsibility for completing tax returns or repayment claims lies with the executor or in the case of someone dying intestate, with the administrator (executor in Scotland) of the estate. The executor may have to complete a tax return for the period after the date of death.
Note that personal allowances are not available to the executor after the date of death to set against post-death income.
There is more information on income tax after the date of death in the section ‘how is an estate taxed during administration?’.
Are there any special capital gains tax rules that apply?
When your spouse or civil partner dies the tax year is divided into two parts for the purposes of assessing their capital gains tax (CGT) liability – up to the date of death and from the date of death.
Up to the date of death
If your spouse or civil partner makes any capital gains in the part of the tax year before they die, the full year's annual exemption (£11,300 for 2015/16 and 2017/18) can be used against the gains and only any remaining balance is chargeable to CGT.
If your spouse or civil partner makes any capital losses in that period, these can be carried back to the previous three tax years, latest first, and set against gains in those years. Any repayment of CGT paid for those earlier years will be made to their estate, but any interest on the repayment will only run from the payment date for the tax year of their death.
Example – Kelly – carry back of losses on death
Kelly died on 1 May 2017 during the 2017/18 tax year. When her executors completed a self assessment tax return to the date of death, they worked out that Kelly's capital losses for that period amounted to £25,000.
In the previous three years Kelly had made the following gains:
2016/17 – £20,000
2015/16 þ £33,000
The losses can be set against the latest year first, so £20,000 is set against 2016/17 gains leaving £5,000 to go against 2015/16 gains.
The repayment of tax due will be made to Kelly's estate.
From the date of death
If your spouse or civil partner owns chargeable capital assets at the date of death, there is no CGT charged on any increase in the value of their assets up to the date of their death. The person receiving the asset from their estate is treated as if they had paid the market value at the date of their death.
The executor or administrator of the estate is responsible for completing any tax returns in respect of gains arising after the death of your spouse or civil partner.
The annual exemption is available for the tax year of death and the following two years.
There is more information on capital gains tax after the date of death in the section ‘how is an estate taxed during administration?’.
What do I have to do about inheritance tax?
Where can I find more information?
Your local authority might be able to direct you to sources of bereavement support. Find out what might be available by using the following websites:
- England or Wales – use the facility on GOV.UK
- Scotland – visit the Scottish Government website
- Northern Ireland – visit nidirect
You can find out where to get help from third party organisations in our ‘getting help section’.
Tax Help for Older People have published 'A Guide to Taxation at Bereavement', which is available on their website.
You can find more information on what you might need to do about income tax on the GOV.UK website. You can find more information on what you might need to do about CGT on the GOV.UK website. You may also find HMRC's Bereavement guide helpful, on the HMRC website. If you live in Northern Ireland, similar information can be found on the nidirect website.
If you are concerned about what will happen to your pension income after the death of your spouse or civil partner, you may be able to find assistance from The Pensions Advisory Service, an independent non-profit organisation that provides free information and guidance on pensions.