Premium bond wins after death

[hiriskpaul]

As I understand it premium bonds are eligible for wins for 12 months after the holder dies. As part of an estate I am sorting out, the deceased has won a few hundred since he died. The winnings have been automatically invested into new PBs.

I included the value of the PBs in the IHT400 and IHT is due to be paid on the estate. What should happen with the winnings? Should they also form part of the estate for inheritance tax purpose or are the winnings free of IHT?

[PinkDalek]

See https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm10081 and the page that follows. Depending on the precise dates of the draw it is unlikely you need to include any post decease prizes.

Not that the narrative extracted below is particularly clear.

The total value of all Premium Bonds owned by the deceased should be included in box 54 and at box 3 on form IHT406 This should also include any unclaimed or uncashed prizes ... A premium bond prize is not taken into account for inheritance tax purposes until the draw allocating it has taken place. . A prize should be taken into account from the day following the date of dispatch of the prize notification ...

That also seems somewhat outdated.

[hiriskpaul]

Thanks, just had another thought - should this be treated as taxable income to the estate? I know PB wins are not normally taxable, but unsure in this instance.

[PinkDalek]

No, definitely not subject to Income Tax.

[Avantegarde]

The NS&I website: https://www.nsandi.com/what-do-i-do-if- ... r-has-died says:
Q: "The customer who has died has won a Premium Bond prize after their death and been sent a prize warrant– what should I do?

A: "Please send the prize warrant back to us and we’ll reissue it to the person entitled to the money, once we’ve completed the claim. We’ll also hold on to any other prizes the customer wins until we have completed the claim. Then we’ll send any future prizes won by warrant (like a cheque) after each prize draw to the person entitled to the money."

Q: "If customer's Premium Bonds remain in the draw, which they can for up to 12 months, rather than are repaid, who will receive any prizes won?

A: "Once we’ve been told of the customer's death, any prizes won will be paid by warrant (like a cheque) to the person entitled to the money after we’ve completed the claim. We’ll hold on to any prizes the customer wins before then and send them once the claim is completed. Then we’ll send any future prizes won by warrant after each prize draw to the person entitled to the money. We can’t pay these prizes electronically or consolidate them and pay them at the end of the 12 months."