Income Tax (Trading and Other Income) Act 2005

Types of estate income

652 Estate income: absolute interests in residue

(1) Income is treated as arising in a tax year from a person’s absolute interest in the whole or part of the residue of an estate if—

(a) the person has an assumed income entitlement for the tax year in respect of the interest (see sections 665 to 670), and

(b) condition A or B is met.

(2) Condition A is that a payment is made in respect of the interest in the tax year and before the end of the administration period (see section 653).

(3) Condition B is that the tax year is the final tax year (see section 653).

(4) Income treated as arising as a result of this section is estate income for the purposes of this Chapter.

653 Meaning of “the administration period” and “the final tax year”

(1) In this Chapter “the administration period”, in relation to the estate of a deceased person, means the period beginning with the deceased’s death and ending with the completion of the administration of the estate.

(2) In the application of subsection (1) to Scotland, the reference to the completion of the administration is to be taken as a reference to the date at which, after discharge of, or provision for, liabilities falling to be met out of the deceased’s estate, the free balance held in trust for the residuary legatees or for the persons with the right to the intestate estate has been ascertained.

(3) In this Chapter “the final tax year” means the tax year in which the administration period ends.

654 Estate income: limited interests in residue

(1) Income is treated as arising in a tax year from a person’s limited interest in the whole or part of the residue of an estate in cases A, B and C.

(2) Case A is where—

(a) the interest has not ceased before the beginning of the tax year, and

(b) a sum is paid in respect of the interest in that year and before the end of the administration period.

(3) Case B is where—

(a) the tax year is the final tax year,

(b) the interest has not ceased before the beginning of that year, and

(c) a sum remains payable in respect of the interest at the end of the administration period.

(4) Case C is where—

(a) the tax year is a year before the final tax year,

(b) the interest ceases in the tax year, and

(c) a sum is paid in respect of the interest in a later tax year but before the end of the administration period, or remains payable in respect of it at the end of that period.

(5) This section does not apply to limited interests to which section 674 (successive interests: holders of limited interests) applies.

(6) Income treated as arising as a result of this section or section 674 is estate income for the purposes of this Chapter.

655 Estate income: discretionary interests in residue

(1) Income is treated as arising in a tax year from a person’s discretionary interest in the whole or part of the residue of an estate if a payment is made in the tax year in exercise of the discretion in that person’s favour.

(2) Income treated as arising as a result of this section is estate income for the purposes of this Chapter.