How to Use an LPA for Tax Returns

Written by James Tyrrell · Reviewed by Anthony Dalton · Last reviewed 16 March 2026

If you hold a registered Property and Financial Affairs LPA, you are responsible for keeping the donor’s tax affairs up to date with HMRC. This guide explains what that involves and how to get it right.

Why Attorneys May Need to Handle Tax

HMRC does not pause its deadlines because someone has lost mental capacity. Income tax, capital gains tax, and council tax all still need to be dealt with. If you hold a registered Property and Financial Affairs LPA, it falls to you to ensure the donor's tax affairs remain up to date.

Failing to file tax returns or pay tax on time can result in penalties and interest charges — all of which would come out of the donor's estate. Acting promptly and keeping thorough records is essential.

Registering with HMRC as an Attorney

Before you can manage the donor's tax affairs, you need to notify HMRC that you hold a registered LPA. The process depends on whether you need to deal with self-assessment, PAYE or both:

• For self-assessment: Write to HMRC or call the Self Assessment helpline. You will need to provide a certified copy of the registered LPA, the donor's Unique Taxpayer Reference (UTR) and National Insurance number, and your own contact details.
• For PAYE: Contact the PAYE helpline to register as an attorney. HMRC will update the donor's record so that tax code notices and correspondence are sent to you.
• Online access: You can request access to the donor's online HMRC account by completing form 64-8 (Authorising your agent) or by writing to HMRC with the LPA details. This allows you to file returns and view the donor's tax position online.

Allow several weeks for HMRC to process your registration. It is wise to do this as soon as the LPA is registered, rather than waiting until a tax return is due.

Filing Self-Assessment Tax Returns

If the donor is required to file a self-assessment tax return — for example, because they have rental income, self-employment income, or taxable savings above certain thresholds — the attorney must file this on their behalf. The key deadlines remain the same:

• 31 October — Deadline for paper tax returns
• 31 January — Deadline for online tax returns and payment of any tax owed
• 31 July — Deadline for the second payment on account (if applicable)

When completing the return, you will need to gather information about all of the donor's income sources, including pension income, rental income, savings interest, dividends and any capital gains. Understanding the financial decisions attorneys can make will help you manage this process confidently.

Managing Tax Codes and PAYE

Most pensioners have their income tax collected through PAYE, with tax deducted at source from their pension payments. As an attorney, you should check that the donor's tax code is correct, particularly if their circumstances have changed. Common reasons for tax code changes include:

• A pension starting or stopping
• A change in the amount of State Pension received
• New income from savings or investments
• The donor moving into a care home (which may affect certain allowances)
• Marriage allowance transfers that may need to be claimed or cancelled

If you believe the donor's tax code is wrong, contact HMRC to request a review. An incorrect tax code can mean the donor is paying too much or too little tax, both of which create problems.

Capital Gains Tax When Selling the Donor's Property

If you need to sell the donor's property — for example, to fund care home fees — there may be capital gains tax (CGT) to consider. This is an area where many attorneys get caught out, especially around the principal private residence relief:

• If the donor lived in the property as their main home and has not lived there for some time (e.g. because they moved into a care home), the final nine months of ownership are usually exempt from CGT regardless
• Lettings relief may apply if the property was rented out at any point
• The annual CGT exemption (currently £3,000 per tax year) can be used to reduce the gain
• CGT on residential property disposals must be reported and paid within 60 days of completion

For more detail on selling the donor's home, see our guide on LPAs and property sales. In complex situations, instructing a tax adviser is strongly recommended — and the cost can be paid from the donor's funds.

Managing the Donor's Council Tax

Council tax is easy to overlook, but as an attorney you may need to manage this too. Key things to be aware of include:

• Severe mental impairment discount: If the donor has been certified by a doctor as having a severe mental impairment (e.g. dementia), they may be entitled to a council tax discount or exemption. This needs to be applied for through the local authority.
• Empty property: If the donor's home is empty because they have moved into a care home, the property may qualify for a council tax exemption. Rules vary by local authority, so check with the relevant council.
• Single person discount: If the donor lived alone, ensure the 25% single person discount is in place.
• Payment arrangements: If there are arrears, contact the council to arrange a payment plan from the donor's funds.

Record-Keeping and When to Get Professional Help

Thorough record-keeping is your best protection when managing someone else's tax affairs. As an attorney, you should:

• Keep copies of all tax returns filed, correspondence with HMRC, and receipts for any tax payments made
• Maintain a clear record of all income received and expenses paid on the donor's behalf
• Retain records for at least six years (HMRC can investigate tax returns going back this far)
• Consider appointing an accountant or tax adviser if the donor's affairs are complex — the cost is a legitimate expense payable from the donor's estate

Being proactive about the donor's tax affairs will save time, avoid penalties and ensure their finances are managed responsibly. If you are unsure about any aspect of the donor's tax obligations, professional advice is always worthwhile.

You will also need access to the donor's bank accounts to manage tax payments. See our guide on how LPAs work with banks for the registration steps.

What You Need to Know

This guide was last reviewed and updated on 16 March 2026. Information is based on current legislation and OPG guidance for England and Wales.

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