Assuming UK tax rules apply, the answer depends on when the bank credited the interest. Interest credited before your father’s death is treated as his income. Interest credited after his death is income of his estate while the accounts remain part of the estate, so the personal representatives—usually the executor or administrator—handle the tax during administration.
When was the interest credited?
HMRC treats bank interest as taxable when it is paid or credited. That makes the credit date important—not simply the period over which the bank calculated the interest. So, if interest was credited to an account before your father died in September 2025, it is treated as his income. If it was credited after his death, HMRC says it is treated as income of his estate. HMRC’s TSEM7458 manual states: “Interest credited to an account after the date of death is treated as the income of the deceased person’s estate.”
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Check the bank statement or ask the bank for the date interest was credited. The fact that the interest relates to days before death does not, by itself, make it income of your father if the bank credited it afterwards.
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Who pays tax while the estate is being administered?
The personal representatives are responsible for working out and paying tax on income received by the estate during administration. GOV.UK describes this period as starting the day after death and ending when everything has been distributed. For interest credited after your father’s death while the money remained in the estate, the personal representatives are therefore the relevant people to deal with the estate’s tax and reporting.
GOV.UK says estates have no allowances on savings, income or dividends, and that other estate income is taxed at 20%. HMRC also describes investment income such as bank interest as chargeable at 20% under its informal payment procedure. These are UK estate-tax rules; the appropriate reporting route depends on the estate’s circumstances. See GOV.UK guidance on settling an estate and HMRC’s informal payment procedures for estates.
What changes once the money is inherited?
After the estate distributes the money, interest earned on it belongs to the beneficiary who holds it. That beneficiary may have to pay Income Tax on interest earned from then on. This is separate from the interest the estate received before distribution. Inherited money itself is not usually immediately subject to Income Tax or Capital Gains Tax; tax may arise on income, such as later interest, generated by that money. GOV.UK explains the tax treatment of inherited money.
If estate income is passed to a beneficiary, the personal representatives should provide a statement of the income and tax treated as paid. This may be an R185 form. Depending on the beneficiary’s total income and allowances for the relevant period, someone with little or no tax liability may be able to claim a repayment. HMRC’s guidance on tax on bank and building-society interest covers interest reporting and related account situations.
What to check for your father’s accounts
- Find the date of death and credit dates. Separate interest credited before death from interest credited afterwards.
- Identify who held the money when interest was credited. Interest received by the estate during administration is distinct from interest a beneficiary earns after distribution.
- Ask the personal representatives about estate income and statements. They handle tax on income received by the estate and can provide an income statement, potentially an R185, when income is distributed.
- Check account ownership. HMRC’s bank-interest guidance also addresses joint accounts and changes in account ownership. If an account was joint or ownership changed, the facts may affect reporting.
The guidance cited here concerns UK bank and building-society accounts. HMRC’s TSEM7458 and TSEM7453 manual pages show an update date of 10 September 2026; the other GOV.UK guidance cited here was accessed on 11 October 2026. Tax rates and reporting procedures can change, so check the current HMRC instructions for the estate’s reporting route.
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