Commentary

I4.551 Successive interests in residue

IHT, trusts and estates

I4.551 Successive interests in residue

I4.551 Successive interests in residue

Special rules apply to the calculation of estate income where there are two or more successive absolute or limited interests during the period of administration1. Where an interest in residue does not wholly correspond with one to which it succeeds, just and reasonable apportionments are to be made in calculating the basic amounts of the respective beneficiaries2.

Successive absolute interests

This will occur where the holder of an absolute interest dies (when the interest will pass to the personal representatives (PRs) of his estate, see I4.543) or where there is a deed varying the Will.

The residuary income and assumed income entitlement of the beneficiary with the new interest (B) for a tax year or accounting period are calculated by including the basic amounts applicable to the earlier beneficiary (A). This calculation is made after all necessary determinations in respect of A's interest have been made. If A holds his interest during part of the final year or period, his assumed income entitlement is calculated as if that year or period was not a final year or period; this prevents A being taxed on income which has not been paid to him at the time his interest ceases and ensures that such income is attributed

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