TSEM7906 - Deceased persons: Personal representatives' expenses: Legislation

Personal representatives’ expenses are allowed as a deduction in calculating residuary income for a tax year under the provisions of ITTOIA 2005/s666 for non-corporate beneficiaries and CTA 2009/s949 for corporate beneficiaries.

The deduction is for all payments made in that tax year in respect of expenses incurred by the personal representatives in that capacity in the management of the assets of the estate.

An important qualification to this provision is that the expenses are only allowable estate deductions if they are properly chargeable to income ignoring any specific direction in a will (ITTOIA 2005/s666(5) for non-corporate beneficiaries and CTA 2009/s949(5) for corporate beneficiaries). See TSEM7910 for further details on when an expense is properly chargeable to income.

Legislation other than tax law is also relevant to the payment of expenses and the treatment of these in accounts and tax computations.

The rights and obligations of personal representatives are set out in the Administration of Estates Act 1925 including, at section 39, powers of management. This Act does not apply in Scotland.

Personal representatives are also brought within the terms of the Trustee Act 2000 by section 35 of that Act. The Act provides authority for the payment of expenses and remuneration to personal representatives although this does not determine the treatment of such payments for tax purposes. Although the Trustee Act 2000 does not apply in Scotland, in practice the position in Scotland does not differ from the position in England and Wales