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 own particular features, are covered in the Beneficiaries’ estate income ― minor

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Corporation Tax

Enterprise investment scheme tax relief

Enterprise investment scheme tax reliefOverview of EIS tax reliefsThe enterprise investment scheme (EIS) offers significant tax reliefs to encourage individuals to invest money in qualifying shares issued by qualifying unquoted companies. The scheme is designed to encourage investment in small,

14 Jul 2020 11:36 | Produced by Tolley Read more

Trusts and Inheritance Tax

Tax on UK resident beneficiaries of non-resident trusts ― overview

Tax on UK resident beneficiaries of non-resident trusts ― overviewIntroductionUK resident beneficiaries of non-resident trusts are subject to UK tax on payments or benefits received from the trust. They are liable for income tax on income distributions from the trust and they may also be liable to

14 Jul 2020 13:47 | Produced by Tolley Read more

Autumn Budget 2024

Owner-Managed Businesses

Tax implications of administration and liquidation

Tax implications of administration and liquidationThis guidance considers the tax implications of a company going into administration or liquidation.Introduction to company administration and liquidationCompany going into administrationA company which is in financial difficulty may go into

14 Jul 2020 15:29 | Produced by Tolley Read more

��Ӱ��