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Hello, I'm Keith and happy to help you with your question.
Just to be pedantic as your aunt dies intestate you are not her executor, but her administrator; it matters not a jot, you have exactly the same powers!
These gains are irrelevant as there is no Capital Gains Tax (CGT) on death, all the deceased's assets being aggregated and suffer Inheritance tax (IT) at a flat rate of 40%. IT does not kick in until 325K and that can be inflated by a number of ways. There could be unused 325K allowance from her husband's estate and also any charitable, inter spousal and certain other legacies don't count. If the estate is below 325K you can forget all the complications. The 8K gain falls to the beneficiaries of the second deceased's estate and is subject to CGT. As most individuals have an Annual Exempt Amount of 11K there will probably be no CGT due.
Once in the beneficiaries hands any interest earned thereon will, of course, be subject to Income Tax in the normal way, but most deposit takers deduct IT at the standard rate of 20%.
I do hope I have shed some light on the position for you.
The 8k gain does not fall to the second deceased estate seeing as the bonds were not my aunt's husband's property. They are solely our responsibility to administrate. from what I understand, there are no capital gains - since the bond was not sold. Incidentally, transfers of the bond from wife to husband would not incur a capital gain. Yes, and I am aware that I am an administrator & not an executor, I used the term loosely, as you pointed out, it is not important re this question.
I would appreciate it if you would answer my actual question
You don't seem to understand that I am not asking about inheritance tax
or capital gains tax.
I am asking about any income tax liability on these bonds and who is liable, my aunt's personal taxation or her personal representative.
Hi.I have a different answer which is based on my reading of the information supplied.As the policies appear to have been written so that the payout was on the second death and your aunt's husband had no beneficial interest in either of them, then in the absence of a will, the policies become the property of the personal representatives for the administration period or until they are surrendered, assigned or pay out on the death of the insured.There is no income tax liability on your aunt to the date of her death as her death did not trigger a chargeable event. Income tax is charged on estate income that isn't dividend income at 20% so as the chargeable event gains are treated as basic rate tax paid, the estate will have no further tax to pay. Top-slicing relief does not apply to personal representatives.If the estate completes tax returns, the chargeable event gains and the tax treated as paid should be disclosed in boxes 9.31 and 9.30 respectively of the trust and estate tax return (page 5) which you can find here.Take a look here, here, and here for more information.I hope this helps but let me know if you have any further questions. Please be sure to rate my answer.
I have to say that my answer, apart from being technically correct and supported by authoritatve links, is significantly different to the other one you were given by somebody else.Please be sure to rate the answer that you prefer.