Income Tax (Trading and Other Income) Act 2005 section 660

Basic amount of estate income: absolute interests

Section 660 sets out how to calculate the basic amount of estate income for a beneficiary who holds an absolute interest in the whole or part of the residue of an estate in administration.

• Before the final tax year, the basic amount is the lower of the sums actually paid in respect of the interest during the year and the beneficiary's assumed income entitlement for that year
• In the final tax year, the basic amount equals the beneficiary's assumed income entitlement for that year, thereby catching any previously untaxed income
• If allowable estate deductions exceed the estate's aggregate income in the final tax year, the basic amount is reduced by the full excess for a whole-residue interest, or by a just and reasonable proportion for a partial interest
• The rules are subject to separate provisions dealing with successive interests in the estate