HMRC bereavement: no penalty for a tax return filed late

When someone dies, HMRC is one of the most important organisations to notify – and one of the more complex to deal with. Unlike a bank or utility company, there is no single form to fill in and no single process to follow. HMRC may be involved in several different ways: as the authority that collects income tax, as the department that manages PAYE, as the body overseeing Child Benefit, and – via a separate team – as the collector of inheritance tax.

This guide walks through each element in plain terms. It covers how to notify HMRC of the death, what Tell Us Once does and does not cover, how income tax and PAYE are settled, when a final self-assessment return is needed, how to pay inheritance tax directly from the deceased’s bank account, when the estate owes capital gains tax, how pension lump sums are taxed, and how to claim a refund if the deceased overpaid. These are all separate tasks; some will apply to every estate, others only to specific circumstances.

If you are working through all the organisations you need to contact, our who do I need to notify? checklist tool can help – select the services the person had and get a tailored list with phone numbers and documents needed for each.

Why HMRC matters after a death

HMRC is different from most other organisations on a bereavement notification list. Telling a bank stops direct debits and freezes accounts. Telling a utility provider stops the bills. Notifying HMRC starts a process rather than ending one.

The deceased may have overpaid income tax in the year they died – in which case a refund is owed to the estate. They may instead have underpaid, leaving the estate with a balance to settle. If they were self-employed or had rental income, a final tax return is needed. If the estate is large enough, inheritance tax must be calculated, declared, and paid – with strict deadlines and interest if you miss them.

HMRC will not sort all of this out on its own. The executor or personal representative must initiate contact, provide the right information, and follow through until each element is resolved. Starting early matters: inheritance tax has a payment deadline six months after death, and interest accrues from that point.

How to notify HMRC

The quickest route is Tell Us Once. When you register the death, the registrar will offer to complete Tell Us Once with you, or give you a reference number to complete it online within 28 days. Tell Us Once notifies HMRC – along with DWP, DVLA, the Passport Office, and your local council – in a single step. (Source: gov.uk – Tell Us Once)

If you cannot use Tell Us Once, call the HMRC bereavement helpline directly:

• Telephone: 0300 322 9620
• Textphone: 0300 200 3319
• Outside UK: +44 300 322 9620
• Hours: Monday to Friday, 8am to 6pm (closed bank holidays)
• Tip: Lines are quieter before 10am

Alternatively, fill in form P1000 (available from gov.uk) and post it to HMRC. P1000 tells HMRC who is dealing with the estate – the executor, administrator, or personal representative – so they know who to correspond with. (Source: gov.uk – report without Tell Us Once)

HMRC’s online bereavement questionnaire at gov.uk/after-a-death walks you through a short set of questions about the deceased’s circumstances and generates a tailored checklist of what HMRC needs from you, with links to the relevant forms. It takes around five minutes and is a useful first step before calling the helpline.

What to have ready when you contact HMRC:

You do not need every document to hand before you call. HMRC will tell you what they need and write to you with next steps.

What Tell Us Once does and does not cover for HMRC

Tell Us Once is the single most useful step, but it has limits, and assuming it has handled everything is a common and costly mistake.

Tell Us Once does notify HMRC about:

• Income tax and PAYE – HMRC starts reviewing whether the deceased paid the right amount in the year of death
• Child Benefit – payments are stopped or transferred
• National Insurance records

Tell Us Once does not deal with:

• A final self-assessment return. If the deceased was in self-assessment, the executor still has to deal with the outstanding return. Tell Us Once does not close the self-assessment record or file the return.
• Inheritance tax. This is handled by a separate HMRC team and is never triggered by Tell Us Once. The executor must value the estate and, if tax is due, complete the forms.
• The deceased’s online HMRC account. Their Government Gateway login is not closed or reassigned by Tell Us Once.
• A business or VAT registration. Final payroll, VAT, and Construction Industry Scheme matters must be dealt with separately.

If you used Tell Us Once, it is worth ringing the bereavement helpline after a few weeks to confirm HMRC has acted on it, especially if you have heard nothing back. (Source: gov.uk – Tell Us Once)

Income tax and PAYE

Once HMRC is notified of a death, it reviews whether the deceased paid the right amount of income tax in the tax year they died.

For PAYE employees, income tax is deducted through payroll across the year. If the person died part way through the tax year – before 5 April – they have often paid too much, because the personal allowance (£12,570 in 2025/26) is spread across the year and they only received income for part of it. In that situation a refund is usually due. (Source: gov.uk – Income Tax rates and allowances)

HMRC will calculate whether a refund or an underpayment is due and send a P800 tax calculation to the executor. Any refund goes to the estate; any underpayment is a debt of the estate.

What the executor needs to provide:

• P45 (issued when the deceased left their last job, or at death if still employed)
• P60 for any prior tax years where a discrepancy is queried
• Details of any other income in the year of death (rental, dividends, savings interest)

The deceased’s employer should issue a P45 automatically. If the deceased was receiving an occupational or private pension, the pension provider should also be told – they will issue a statement showing the total pension paid in the year of death, which HMRC needs to finalise the position. (Source: gov.uk – bereavement and deceased estate enquiries)

Self-assessment

If the deceased was self-employed, had rental income, received significant dividends, or had any income that was not taxed at source, they were almost certainly in self-assessment. The executor must deal with any outstanding returns.

There are two types of self-assessment obligation to consider:

1. The deceased’s final return. This covers the period from 6 April to the date of death. HMRC will write to the executor with a reference and confirm what is needed. It accounts for the deceased’s income, any capital gains, and tax due or overpaid in that final period. The return for the year of death must be filed on paper – HMRC’s online service cannot be used for a deceased person’s final return.

2. Estate income during administration. If the estate itself generates income while it is being administered – from a rental property, savings interest, or dividends on shares the estate still holds – that income may need to be reported separately. The estate is a separate taxable entity from the deceased.

When estate income needs reporting to HMRC:

From 6 April 2024, the estate must report income to HMRC if it is more than £500 in any tax year. If income is £500 or less, you do not need to report it, and there is no tax to pay on it. If it is over £500, you report all of the income – you cannot deduct the first £500. (Source: gov.uk – reporting the estate)

For simple estates you can often report informally by writing to HMRC’s bereavement service rather than filing a full return, provided:

• The estate was worth under £2.5 million at death
• The total income and capital gains tax due across the whole administration period is under £10,000
• No single year’s asset sales exceeded £500,000

For more complex estates, the executor must register with HMRC and submit form SA900. Registration must happen by 5 October after the relevant tax year; the return is due by 31 January (online) or 31 October (paper). (Source: gov.uk – reporting the estate)

Self-assessment penalties and bereavement. Missing a deadline triggers an automatic £100 penalty. However, HMRC’s policy is not to impose a late filing penalty where the taxpayer themselves died before the return fell due – the penalty simply should not arise. For executors who miss a deadline for the estate’s own returns, bereavement counts as a “reasonable excuse” for late filing. If you receive a penalty notice, appeal using form SA370 and explain the circumstances; penalties in bereavement cases are frequently cancelled in full. Keep a death certificate and your executor appointment letter as supporting evidence. Contact the bereavement helpline as early as possible and ask for more time if the estate is complicated. (Source: gov.uk – appeal a Self Assessment penalty)

Correspondence address for the bereavement service: HM Revenue & Customs, BX9 2BS (no street name or town is needed – this is a dedicated HMRC postal address).

Inheritance tax and paying it from the bank with IHT423

Inheritance tax (IHT) is separate from income tax and is the responsibility of the executor or administrator. It is paid from the estate before any assets are distributed to beneficiaries. For a full walkthrough of thresholds, exemptions, gift rules, and reporting, see our inheritance tax guide. This section covers the essentials and, importantly, how to pay it before probate.

The basics:

• IHT is charged on estates worth more than £325,000 (the nil-rate band), a threshold frozen until at least 2030.
• If the deceased left their home to children or grandchildren, the threshold can rise to £500,000 through the residence nil-rate band (up to £175,000).
• Married couples and civil partners can pass unused nil-rate band to the survivor, so a couple’s combined threshold can reach £1,000,000.
• Everything left to a spouse, civil partner, charity, or community amateur sports club is exempt.
• The rate above the threshold is 40% (or 36% if at least 10% of the net estate goes to charity).

(Source: gov.uk – inheritance tax)

The deadline: IHT must be paid by the end of the sixth month after the person died. If someone died in January, payment is due by 31 July. Miss this and HMRC charges interest. Form IHT400 must be submitted within 12 months of death. (Source: gov.uk – pay your inheritance tax bill)

The problem: IHT is due before probate

Most executors are surprised to learn they must pay at least some inheritance tax before probate is granted – using money they cannot yet legally access, because the bank will not release funds without the grant, and the grant will not be issued until tax is paid. HMRC’s Direct Payment Scheme is designed to break this deadlock.

How the Direct Payment Scheme and IHT423 work

The Direct Payment Scheme lets banks, building societies, and NS&I pay inheritance tax directly to HMRC from the deceased’s accounts, before probate is granted. Here is the sequence:

1. Get an inheritance tax reference number. Apply to HMRC for an IHT payment reference at least three weeks before you need to make the payment. You cannot pay without it.
2. Ask each institution to recognise you as the personal representative. Each bank or building society handles this differently, so contact them early.
3. Complete form IHT423 – one for each account. Send a separate IHT423 to each bank, building society, or NS&I account you want to draw from. The form authorises that institution to pay the inheritance tax straight to HMRC.
4. Send form IHT400 to HMRC at HM Revenue and Customs, BX9 1HT.

Once the institutions have paid HMRC, HMRC issues a probate application code (England and Wales) or stamps and returns your confirmation documents (Scotland and Northern Ireland), which lets the probate application proceed. (Source: gov.uk – pay inheritance tax from the deceased’s bank account)

Not every institution takes part in the scheme, and some place limits on how much they will release this way, so confirm with each one. When you notify the deceased’s bank of the death, ask at the same time whether they accept IHT423 and what their release limit is – our guides to notifying Barclays, Lloyds, Halifax, and other providers in our bank notification guides set out each bank’s bereavement process. If the estate cannot raise enough to cover the bill, IHT on certain assets such as property can be paid in annual instalments over ten years, though interest still applies to the outstanding balance. (Source: gov.uk – pay your inheritance tax bill)

If no IHT is due – because the estate is under the threshold, or everything passes to a spouse – a simplified process applies and you will not normally submit IHT400. For the full probate timeline, see how long does probate take.

Do you even need to send an IHT400?

Most estates are excepted estates – there is no inheritance tax to pay, and you do not send a full IHT400. The rules changed for deaths on or after 1 January 2022: the old IHT205 short form (and IHT207/IHT217) was abolished. Instead of a separate inheritance tax form, executors applying for probate in England and Wales now give the reduced estate information directly within the probate application itself. (Source: gov.uk – report an excepted estate for inheritance tax)

You only need a full IHT400 where the estate is not excepted – broadly, where inheritance tax is due, or the estate is large or complex (for example, foreign assets above set limits or substantial lifetime gifts). If you are unsure which category the estate falls into, the inheritance tax guide walks through the thresholds, and HMRC’s bereavement helpline can confirm before you complete any forms.

Capital gains tax for the estate

Capital gains tax (CGT) can catch executors out, because most people associate it with the deceased rather than the estate. When someone dies, their assets are treated as passing to the estate at their market value on the date of death, so no CGT arises at that point. The issue comes later.

If the personal representatives sell an asset during the administration period for more than its date-of-death value, the increase is a gain that may be liable to CGT. The most common trigger is a property that rises in value between the date of death and the date it is sold, or shares sold to raise cash for the estate.

The figures (2025/26):

• The estate gets the full annual exempt amount of £3,000 for the tax year in which the death occurred and the two tax years following. After that, the estate gets no annual exemption. (Source: gov.uk – Capital Gains Manual CG30700)
• The rate is 24% on gains from residential property and 24% on other chargeable assets for personal representatives.

A practical point on property: if the estate sells the deceased’s home and it has gone up in value since death, deducting selling costs (estate agent and legal fees) and using the annual exempt amount can reduce or remove the bill. If beneficiaries are likely to sell anyway, transferring the property to them before sale can sometimes use their personal allowances instead – worth taking advice on before you sell. Gains on UK residential property must be reported and the tax paid within 60 days of completion. (Source: gov.uk – report and pay Capital Gains Tax on UK property)

Tax on pension and death-in-service lump sums

When a pension scheme or an employer’s death-in-service policy pays a lump sum to beneficiaries, whether it is taxable depends mainly on the deceased’s age at death.

If the deceased died before age 75: Most lump sum death benefits are paid tax-free, provided they are paid out within two years of the scheme being told of the death, and provided they fall within the deceased’s lump sum and death benefit allowance (LSDBA), set at £1,073,100. Any amount above the allowance is taxed at the beneficiary’s marginal rate of income tax.

If the deceased died at age 75 or over: Lump sum death benefits are taxed at the recipient’s marginal rate of income tax. The paying scheme deducts tax before paying out.

Responsibility for identifying any amount over the allowance, and reporting it, rests with the deceased’s personal representatives, so executors need to keep track of all death benefit lump sums paid across every scheme. (Source: gov.uk – pension death benefits and the lump sum and death benefit allowance)

Death-in-service payments made through a registered pension scheme are usually paid at the trustees’ discretion, which means they normally fall outside the estate for inheritance tax. Confirm the arrangement with the scheme – it affects both the IHT position and who receives the money. For tracing workplace or personal pensions the deceased may have held, see our guide to the Pension Tracing Service.

Tax refunds owed to the estate

If the deceased overpaid income tax in the year they died, the overpayment is repaid to the estate. This is common where a PAYE employee or pensioner died part way through the tax year and the full year’s personal allowance was not used.

HMRC normally works out the position automatically once it has the final income figures and issues a P800 calculation showing the refund. The money is paid to the estate. A few practical points matter:

• Cheques can be made out to the deceased. HMRC may issue a refund cheque payable to the deceased and send it to their last known address. If the property has been cleared, redirect their post promptly – our guide to Royal Mail’s bereavement redirection explains how. If a cheque is in the wrong name or out of date, ask the bereavement service to reissue it to the executor.
• HMRC can be slow. Processing a P800 and issuing a refund can take several months. Do not finalise and distribute the estate until all HMRC correspondence is settled and any repayment received – if money is owed back to HMRC after distribution, the executor can be left chasing beneficiaries.
• Keep evidence of income. P45, P60, and pension statements all help HMRC settle the position faster and reduce the risk of an under-repayment.

(Source: gov.uk – bereavement and deceased estate enquiries)

The deceased’s HMRC online account and Government Gateway

You cannot take over, transfer, or keep using the deceased’s Government Gateway login or HMRC online account, and you should not log in as them. HMRC deals with a deceased person’s affairs by post and through the bereavement helpline, not through their online account.

For the final self-assessment return, HMRC requires a paper return for the year of death; the online service is not available for it. Once you have told HMRC your role – by phone, in writing, or with form P1000 – HMRC will correspond with you as the personal representative. If you use a tax agent or accountant, they can be authorised to act on the estate’s behalf. (Source: gov.uk – dealing with HMRC after a death)

Child Benefit

Child Benefit is administered by HMRC. If the deceased was receiving it – either as the claimant or as the partner of the claimant – HMRC needs to know as soon as possible.

Tell Us Once notifies HMRC about Child Benefit automatically. If you are not using Tell Us Once, contact the bereavement helpline (0300 322 9620) to report the change.

Why acting quickly matters: Child Benefit overpayments become a debt of the estate. If payments continue after the date of death and are not recovered, HMRC can ask the executor to return them, and there is no hardship exception. Child Benefit continues for a surviving parent or carer if a child is still eligible. If you are taking on the care of a child whose parent has died, the benefit may transfer to you. See our guide to Guardian’s Allowance if both parents have died – a separate payment worth £22.95 per week per child (2026/27).

If the deceased ran a business

If the deceased was self-employed or ran a business, there are extra HMRC tasks beyond the personal tax return. Tell the bereavement helpline early, and for anything involved, use the deceased’s accountant.

• Final payroll (employees). If the business had employees, a final Full Payment Submission (FPS) and Employer Payment Summary (EPS) must be sent under Real Time Information, and any outstanding PAYE and National Insurance settled.
• VAT. A VAT-registered business usually has to be deregistered or transferred, with a final VAT return submitted. If a spouse or beneficiary continues the business, the registration can sometimes be transferred rather than cancelled.
• National Insurance. Class 2 and Class 4 National Insurance contributions stop at the date of death.
• Construction Industry Scheme. If the deceased was a CIS contractor or subcontractor, HMRC needs to be told so deductions and returns can be brought to a close.

(Source: gov.uk – bereavement and deceased estate enquiries)

Scotland and Northern Ireland

HMRC’s tax rules apply across the whole UK, so everything above – the bereavement helpline, Tell Us Once, income tax reviews, self-assessment, and inheritance tax – works the same wherever the deceased lived. The difference is the legal process for dealing with the estate.

In Scotland, you apply for Confirmation rather than probate. Confirmation is granted by the local Sheriff Court using form C1 (the inventory of the estate). Most Scottish estates are excepted, so no IHT400 is needed. Where inheritance tax is due, the sequence is: send the IHT400 to HMRC together with a copy of form C1, HMRC issues an authorisation code once the tax is settled, and you then submit the application for Confirmation to the Sheriff Court. (Source: gov.uk – applying for probate if the person died in Scotland, Scottish Courts – dealing with a deceased’s estate)

In Northern Ireland, the term is probate, as in England and Wales, but applications go through the Northern Ireland Courts and Tribunals Service rather than HM Courts and Tribunals Service. The inheritance tax forms and HMRC contact details are identical to the rest of the UK.

If you are dealing with an estate in Scotland or Northern Ireland, the tax side of HMRC is the same – it is only the court application and the supporting forms that differ.

How long does it take?

HMRC’s handling of bereavement tax affairs does not run to a fixed timetable. The timeline depends on what needs resolving.

For a straightforward estate – employed, PAYE, no self-employment, under the IHT threshold – HMRC’s involvement is usually resolved within a few months. Where self-assessment is involved, or the estate is close to or over the IHT threshold, it can take considerably longer. Do not finalise and distribute the estate until all HMRC matters are closed.

Things to watch out for

• The bereavement helpline is separate from general HMRC enquiries. If you call the general number you may be passed around and held for a long time. Use 0300 322 9620 to reach the bereavement team directly.
• Inheritance tax is due before probate. Plan for it early and use IHT423 and the Direct Payment Scheme to pay from the deceased’s accounts.
• The estate can owe capital gains tax. A property or shares rising in value between death and sale can create a bill – check before you sell.
• Refund cheques can be in the wrong name. Redirect post and ask for cheques to be reissued to the executor.
• Keep records. Note the date of every call, who you spoke to, and what was agreed. HMRC correspondence can be slow, and a clear paper trail makes follow-up far easier.

Summary

HMRC is one of the more time-consuming bereavement notifications, but each part is manageable when taken in order. Start with Tell Us Once to cover income tax, PAYE, and Child Benefit. Confirm whether a final self-assessment return is needed for the deceased’s final year. If the estate is over the IHT threshold, begin the inheritance tax process promptly and use IHT423 to pay from the bank – the six-month payment deadline is strict and interest accrues. Watch for capital gains tax if the estate sells property or shares, and chase any refund owed before you distribute the estate.

Quick reference:

• Bereavement helpline: 0300 322 9620 (Mon–Fri 8am–6pm)
• Tell Us Once: available when registering the death, or within 28 days via gov.uk
• Self-assessment / general post: HM Revenue & Customs, BX9 2BS
• Inheritance tax (IHT400): HM Revenue & Customs, BX9 1HT
• Official guidance: gov.uk – dealing with the estate

For related government notifications, see our guide to Tell Us Once – the single-step service that also notifies DWP, DVLA, and your local council. For council tax specifically, see notifying your council when someone dies. For the full inheritance tax picture, see our inheritance tax guide, and for the wider process see how long does probate take. If a surviving partner may be eligible for support, see Bereavement Support Payment.