FAQs - Beneficiaries

Q. How does it affect my tax position if I get the whole or part of the residue of an estate?

A. For each tax year during which the estate is in administration, the personal representatives have to calculate the income relating to your share of the estate. The personal representatives do this by deducting certain expenses from the income that the estate received.

If you get a payment from the personal representatives during the administration of the estate, it is treated as part of your income for the tax year in which you receive it. To work out how much to put on your tax return, there is a two-stage test: for any given year, the estate income which you must put on your personal tax return will be the lesser of:

• the amount actually paid to you in that year, or
  
• your residuary income, calculated as:
  
  • the total of your residuary income from the date of death until the end of the tax year in which the payment is made, less
    
  • any amounts which have already been treated as your income for earlier years.

The personal representatives should give you a form R185 (Estate Income) setting out how much to put on your return.

When the personal representatives complete the administration of the estate, any residuary income that has not so far been treated as your income is treated as your income for the year in which the administration of the estate is completed.

Your income for the year in which the administration of the estate is completed is the residuary income that has not so far been treated as your income.