802 Supplementary provisions as to absolute interest in residue

Summary

This section sets out how the residuary income of an estate is determined for the purposes of section 801.

Details

(1) The residuary income of an estate for any year of assessment is the aggregate income of the estate for that year reduced by —

• any annual interest, annuity or other annual payment which is a charge on the residue,
• any expenses incurred by the personal representatives in the management of the assets of the estate, to the extent that they are properly chargeable to income,
• any income to which a beneficiary has become entitled to during the course of the administration under a specific disposition or will become entitled to under a contingent or a vested interest when the administration period is completed.

(2) The “benefits received” by a residuary beneficiary in respect of an absolute interest in the residue mean the total of all sums paid (either before the completion of the administration period or on completion of that period) less income tax deducted at the standard rate. In the case of a foreign estate, the benefits received is the amount of such sums without deduction of income tax. Where the benefits or advances made to a beneficiary in respect of his/her share in the residue during the course of the administration exceed the amount of the total of the residuary income at the completion of the administration period, the beneficiary’s residuary income is proportionately adjusted for the tax years of the administration period.

(3) If a beneficiary, other than the ultimate beneficiary at the close of the administration period, had an interest in the residue during the administration period, the residuary income of both beneficiaries is aggregated together to see whether an apportionment as set out in subsection (2) above is needed.

Relevant Date: Finance Act 2021