TSEM7652 - Deceased persons: limited interests in residue - description

There is a statutory definition of this term in ITTOIA/S650(2). A beneficiary has a limited interest in residue if he or she is entitled to receive the income but not the capital of the residue (or a share of the residue) of an estate.

Often the beneficiary will be entitled to receive the income during his or her lifetime. The beneficiary is then called a life tenant. In Scotland, the term is liferenter. There are other types of limited interest. For instance the beneficiary may be entitled to the income during the lifetime of another person or until the happening of a particular event.

The tax rules are the same no matter how the limited interest arises. There will always be a trust involved. One of the HMRC Trusts Offices may have a file for the estate.