SolvedTSEM7458 | Deceased persons: beneficiaries of estates - bank or building society
From HM Revenue & Customs · Trusts, Settlements and Estates Manual
Interest paid or credited before the date of death
Interest is taxable when it is paid or credited to an account. Interest credited to the deceased's account before the date of death is treated as the income of the deceased.
Interest paid or credited after the date of death
Interest credited to an account after the date of death is treated as the income of the deceased person's estate.
The personal representatives should provide the beneficiaries with a statement, which may be on form R185 (Estate Income), showing the amount of estate income paid to each beneficiary and the amount of tax deemed to have been paid on that income.
Repayment
A beneficiary of the residue of the estate, who has little or no tax liability, may be able to claim a repayment of tax charged on the interest. The amount depends on their level of total income and allowances for the period.
Where there is more than one beneficiary entitled to the income of the residue of the estate, each one is treated as receiving only their share of the income. They may each be able to claim tax back on that share, depending on their particular circumstances.