Income Tax (Trading and Other Income) Act 2005 section 651

Meaning of "UK estate" and "foreign estate"

Section 651 defines the terms "UK estate" and "foreign estate" for the purposes of taxing income from deceased persons' estates, setting out the conditions that determine which category an estate falls into for a given tax year.

• A UK estate is one where all income has borne UK income tax (by deduction or direct assessment on the personal representatives) and none of that income escapes UK tax because the personal representatives are non-UK resident — or alternatively, where the estate's entire income consists of sums not liable to tax or treated as already bearing tax.
• A foreign estate is simply any estate that does not qualify as a UK estate for the tax year in question.
• When applying the main residence-based tests (conditions A and B), certain categories of income — sums not liable to tax and sums treated as bearing tax — are left out of the assessment altogether.
• The classification matters because the tax treatment of payments received by beneficiaries differs depending on whether the estate is a UK estate or a foreign estate.