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HMRC internal manual

Trusts, Settlements and Estates Manual

Deceased persons: beneficiaries of estates - tax rules

In general law the income that arises to the estate of a deceased person during the administration period is that of the personal representatives. They are liable to tax on this income either at the basic rate, savings rate (for years where this rate applies) or the dividend rate depending on the type of income. It is not the income of the beneficiaries.

Special tax rules in Chapter 6 Part 5 ITTOIA (for non-corporate beneficiaries) and Chapter 3 Part 10 CTA 2009 (for corporate beneficiaries) have to be applied before such income can be treated as income of the beneficiary who has an interest in the residue of the deceased person’s estate. The responsibility for administering these rules rests with HMRC Administration of Estates Cardiff.