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HMRC internal manual

Trusts, Settlements and Estates Manual

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HM Revenue & Customs
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Deceased persons: beneficiaries of estates - introduction

The purpose of this guidance is to enable you to deal with income shown on tax returns or claims under the heading `income from estates’. It also enables you to answer customer enquiries on this subject.

The word `beneficiary’ where used in this guidance means a person who has benefited from the estate of a deceased person.

In every day speech people may talk about receiving a legacy from the estate of a deceased person. This is not always the correct legal term. (TSEM7490 explains the meaning of the term `legacy’ and the tax rules that apply to legacies).

You will more usually be concerned with people who have `an interest in residue’. TSEM7602 explains the meaning of the term residue. Beneficiaries may have one of three different types of interest in the residue of the estate of a deceased person.

Absolute interest: the beneficiary is entitled both to the capital and to the income of the whole or part of the residue of the estate.

Limited interest: the beneficiary is entitled to receive income but not capital from the residue of the estate.

Discretionary interest: the beneficiary receives income from the estate only if the personal representatives exercise a discretion in his favour.

The guidance in TSEM7604 onwards explains, in general terms, how to handle cases where beneficiaries have income from estates. It also tells you more about interests in residue and some of the practical problems that can arise. Use TSEM7480 to take you to the right part of this guidance.