TSEM7604 - Deceased persons: absolute interests in residue - tax rules

While the personal representatives administer the estate the income that they will usually receive is the income of the personal representatives. They are liable to tax either at the basic rate, savings rate (for years where this rate applies) or the dividend rate depending on the type of income. It is not the income of the beneficiaries.

From 6 April 2024, estates with income of all types up to £500 will not require personal representatives to pay income tax on that income as it arises. Where income exceeds that amount, tax will be payable on the full amount. TTOIA/s649.

• Special tax rules in ITTOIA/S659 and 652 apply to non-corporate beneficiaries and in CTA 2009/S937 to corporate beneficiaries. Under these rules beneficiaries who have absolute interests in residue are deemed to have received income from the estate. See TSEM7608.

There are different rules for payments made during and on completion of the administration period therefore, HMRC need to know whether the administration has been completed.