Declaring administration period interest to HMRC - must we close the savings account?

[Northern Guy]

There's no problem with making interim distributions to residual.beneficiaries if the funds available permit it. Of course the Executor(s) must ensure they have retained sufficient funds to pay all.forseeable debts and taxes.

My OH was one of five residual beneficiaries where the estate executor was a professional trustee company and they made no fewer than four interim distributions over two years as assets were realised into cash.

Useful to know for future reference, however we were just playing it by the book and leaving all under probate until distribution. She didn't need the money anyway, as it was destined to sit in a building society account for a further year or two, so it made no difference whether in the probate one or else a personal one of her own.

Having taken this course, I am getting the impression from replies (please correct me if wrong) that we must close the probate BS account to realise the gross interest we must declare for tax.

[Northern Guy]

I've just had an afterthought following on from PallasAthena's comments on being allowed to make interim distributions. My wife the sole executor is also the sole beneficiary, and as stated she used grant of probate to close the deceased's building society accounts and transfer the total proceeds into a freshly opened account in her name at the same building society. This is what I've referred to as the probate BS account, although it was not titled in any special way ('executor of' titles seem to have fallen out of favour, the bank did similar) rather just in her own name.

Could she not treat that as an interim distribution to herself? If so, she need not close it to determine estate interest, rather just wait to its anniversary when interest is credited in the normal way which she declares to HMRC as over £1k? This would also mean she benefitted from the £1k personal savings allowance, whilst estate interest has no such allowance. Does this sound the ideal solution?

[Pezza54]

Please see my post 8. Your question in post 17 is answered here

[Northern Guy]

Please see my post 8. Your question in post 17 is answered here

So essentially 'yes' then? This being a very simple case (sole executor being sole beneficiary) where there is little real distinction between personal and probate accounts, so it's advantageous to treat interest as personal (benefit from savings tax allowance) rather than estate (no tax allowance, and need to close a/c to realise & declare interest).