Quilter Investment Platform products – guide to taxes applicable on death

Tax free cash lump sum, death pre age 75 – restricted by the individual's lump sum and death benefit allowance. The standard allowance is £1,073,100 that can be paid out on death. The standard allowance may be higher for people with protections. This will take into consideration all other tax-free lump sum payments the member has taken during their lifetime and on death. This will include PCLS, UFPLS, death in service and serious ill health lump sums.

Income tax, death pre age 75 – All income will be paid to beneficiaries tax-free.

Tax free cash lump sum, death post age 75 – No tax-free cash post age 75 and any lump sums taken will be subject to the recipient beneficiaries’ marginal rate of tax.

Income tax, death post age 75 – All income will be subject to the recipient beneficiaries’ marginal rate of tax.

For more information on tax and the process following death, please review our guide.

IHT – Value of the ISA fund will form part of the deceased’s estate on death. The value used for probate will be that at the date of death.

CGT / Income tax – ISAs are free of any personal liability to CGT and income tax. In addition, the ISA wrapper can remain in place until the completion of the administration of the estate or three years and one day after death. This means for this period the deceased person’s ISA will not create a CGT or income tax liability for the legal personal representatives.

For more information on tax and the process following death, please review our guide.

IHT – Value of the CIA fund will form part of the deceased’s estate on death. The value used for probate will be that at the date of death.

CGT – No CGT liability on the assets at the point of death and the legal personal representatives are deemed to acquire the assets at probate value i.e. they’re re-based. Any beneficiary who receives the CIA via transfer of ownership will be liable for gains from date of death only.

Income tax – Any interest and dividend payments (including those reinvested) up until the point of death will form part of the deceased’s income in the year of death. Any interest and dividend payments (including those reinvested) during the period of administration will be taxed on the executors at 20%/8.75% respectively. When a beneficiary is paid the income by the executors they will need to claim/settle any additional tax based on their marginal rate of tax. The executor will provide the beneficiary with a form R185 to account for the tax already paid by them.

For more information on tax and the process following death, please review our guide.

There are many different outcomes depending on how the bond is owned and on who’s life.

IHT – If the bondholder has died, the bond forms part of the bondholder’s estate. If the bond is held jointly, then half the policy value will fall into the estate for IHT purposes.

Income Tax – bonds are taxed under chargeable event rules so there is a potential income tax liability if a gain has been made on the bond. Whether death triggers an assessment depends on who has died and the role they ‘played’ on the bond.

This can be complex and is summarised in more detail.

For more information on tax and the process following death, please review our guide.

IHT – If the gift made by the settlor of the trust was over 7 years ago then the gift will no longer form part of their estate (with the exception of the settlor included/probate trust). However, if the settlor dies before 7 years have passed, the initial value of the gift will form part of their estate on death for IHT purposes. If there are multiple settlors, the value will only relate to the gift they made.

For more information on the taxation of lifetime gifts view our guide.

Income tax (CIB) – An immediate tax liability would only arise on the death of the last life assured on the bond as described above.

For more information on the taxation of bonds held in trust please view our guide.

Income / chargeable gains (CIA) - As there are no lives assured on a CIA there will not be a circumstance where the CIA automatically comes to an end due to the death of a settlor or a trustee. The tax treatment will continue based on the type of trust.

For more information please read our article 

Trust taxation at a glance