Income Tax (Trading and Other Income) Act 2005 section 654

Estate income: limited interests in residue

Section 654 sets out the three scenarios (Cases A, B and C) under which income is treated as arising in a tax year from a beneficiary's limited interest in the residue of an estate during administration.

• Case A applies where the interest has not ceased before the start of the tax year and a payment is made in respect of the interest during that year but before the end of the administration period.
• Case B applies in the final tax year of administration where the interest has not ceased and a sum remains payable in respect of it at the end of the administration period.
• Case C applies where the interest ceases in a tax year before the final year, and a payment is made in a later tax year (but before administration ends) or a sum remains payable at the end of the administration period.
• The section does not apply to limited interests covered by section 674 (successive interests), and any income arising under either section 654 or section 674 is classified as estate income for the purposes of Chapter 6.