Tax during administration period of an estate - ns&i cash ins

[Bouleversee]

Does anyone know whether the final interest and index-linked return added when NS&I index linked certificates are cashed in by the executor after probate has been granted are taxable on the estate?

[PinkDalek]

Only the interest on the following are to be included:

See Q9 on Page 4 for 2017-18:

https://assets.publishing.service.gov.u ... 0-2018.pdf

Box 9.5 National Savings & Investments (other than First Option Bonds, Guaranteed Growth Bonds and Guaranteed Income Bonds)


Box 9.6 National Savings & Investments First Option Bonds, Guaranteed Growth Bonds and Guaranteed Income Bonds

Then see Page 13:

https://assets.publishing.service.gov.u ... 0-2018.pdf

Enter in box 9.5 the total amount from the following. • Direct Saver • investment account • income bonds

It is none of those.

[Bouleversee]

Thanks, PD. However, it is still not totally clear to me. Maybe I'm nit-picking but whereas the negligible interest would appear to be taxable, it doesn't make clear whether the "index-linked return" (totalling £1,560) counts as interest as opposed to capital gain or tax free compensation for inflation LOL. Would you include the whole lot, taxable at 20%?

[AJC5001]

Does anyone know whether the final interest and index-linked return added when NS&I index linked certificates are cashed in by the executor after probate has been granted are taxable on the estate?

Index-linked certificates are Tax-free investments. https://www.nsandi.com/system/files/ass ... ummary.pdf

"Any index-linking and interest you earn is tax-free, so it won’t count towards your Personal Savings Allowance. Find out more at nsandi.com/tax-and-savings "

I don't see why probate etc. should affect that.

Adrian

[PinkDalek]

Thanks, PD. However, it is still not totally clear to me. Maybe I'm nit-picking but whereas the negligible interest would appear to be taxable, it doesn't make clear whether the "index-linked return" (totalling £1,560) counts as interest as opposed to capital gain or tax free compensation for inflation LOL. Would you include the whole lot, taxable at 20%?

Yes, I do tend to agree you are nit-picking but do understand how you like to get these things right and, no, the 0.01% is not taxable nor the RPI.

You've previously seen and are aware of the NS&I Index-linked Savings Certificates page here https://www.nsandi.com/index-linked-sav ... rtificates (and AJC5001 has now supplied as similar link).

Perhaps it would help if you bear in mind the non-taxable interest on these consist of both the Index-linking to RPI + 0.01% tax-free. The RPI is used to calculate part of the non-taxable interest, that is all.

To Borrow from the Only Fools And Horses Theme Song:

No income tax, no VAT and no CGT (as not a chargeable asset).

To be clear, I'd not include anything but, if you need to delve further, one would probably need to find the original prospectus.

[Bouleversee]

Well, ISAs (Cash or Equity) are tax free investments too but at the time my husband died (the law has changed for deaths after last April) , the ISA wrapper came off at date of death and any income received thereafter during the admin. period is taxable on the estate (even divs. on shares which were x-d at time of death and those paid on shares ultimately transferred to my ISA with the same manager under the APS) as is any other interest paid or credited during that period, with no allowance for interest or divs but a cgt allowance (for 2 years) on gains. I still say that that form you linked to suggests that all NS&I interest is taxable and if the RPI add-on counts as interest that would be, too. However, having now spent some time reading the guidance notes linked to that form, I accept there may be a special case for these certs. since they are not mentioned in the notes re 9.5 unless they come under other income from UK savings and investments. I shall mention them in my letter and show what was added but say I have been advised they are not taxable.

I am not doing the return online or on a form, just by letter which I gather is permissible for simple estates. I may get a penalty for not doing it before 3l Oct. but too bad. Cheaper than paying an accountant, not that I could find one locally who handled estate returns.