Income tax for beneficiaries of estates

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

During the period of administration, personal representatives (PRs) receive income arising from the deceased’s assets until they are sold or transferred to beneficiaries. They also receive income from bank accounts or other investments which they have set up to hold cash pending distribution of the estate. Income tax is paid at standard rates on these sources of income.

See the Income tax during administration guidance note.

This guidance note explains how the estate income is allocated to beneficiaries as taxable income so that the estate income is eventually taxed at the beneficiaries’ personal rates.

Principles of taxing beneficiaries on estate income

Beneficiaries’ entitlement to estate income, and consequently their liability to income tax, depends on the nature of their interest under the Will or intestacy. The most common type of interest which gives rise to an income tax liability for the beneficiary is an absolute interest in residue. This is described below. Other types of interest, which have their

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

TAKE A FREE TRIAL

Popular Articles

Value Added Tax

Payments on account (POA)

Payments on account (POA)This guidance note provides and overview of the payments on account regime (POA). More in depth commentary can be found in De Voil Indirect Tax Service V5.110.What are payments on account?VAT registered businesses with an annual VAT liability of more than £2.3m are required

14 Jul 2020 12:52 | Produced by Tolley Read more

Corporation Tax

FRS 102 ― tax presentation and disclosures

FRS 102 ― tax presentation and disclosuresPresentation of tax under FRS 102An entity must present changes in a current tax liability (or asset) and changes in a deferred tax liability (or asset) as a tax expense (or income) unless the item creating the current or deferred tax amount is recognised in

14 Jul 2020 11:46 | Produced by Tolley in association with Malcolm Greenbaum Read more

Owner-Managed Businesses

Capital allowances on cars

Capital allowances on carsSummary of capital allowances on carsThe current capital allowance rates applicable to cars are as follows:Pool typeDescription of carRateLegislationMain rate poolNew and unused cars with CO2 emissions of 50g/km and below 18%CAA 2001, s 104AASecondhand cars with CO2

14 Jul 2020 11:08 | Produced by Tolley Read more

UU��ֱ��