Section 955: Assumed income entitlement of holder of absolute interest following limited interest
2405.This section and section 956 explain the position of the absolute interest holder where successive limited and absolute interests in the residue of an estate are held by different persons. It is based on section 698(1A) and (1B) of ICTA. The corresponding rule for income tax is in section 672 of ITTOIA.
2406.The section applies only where the later interests arise or are created on the cessation of the previous interest otherwise than by death. The position of limited interests which cease on the death of the holder before the final tax year are dealt with in section 654 of ITTOIA and section 939 of this Act. All sums paid or remaining payable in respect of that interest after the tax year of death are treated as estate income arising in the tax year of death.
2407.Examples of situations, in relation to limited interests, that are covered by the section include:
the disclaiming of a life interest which accelerates an existing interest under the will; and
an interest which is only held until marriage or attaining a certain age.
2408.Subsections (3) and (4) contain the two rules introduced by subsection (2). They deal with the limited interest which ceases otherwise than on death. They also explain how such an interest is brought into the calculation of whether the person with the absolute interest has an assumed income entitlement and, if so, its amount. The assumed income entitlement works on a cumulative basis, so the share of the residuary income of the absolute interest holder and the basic amounts of previous accounting periods are taken into account.
