Section 674 | Successive interests: holders of limited interests

(1)This section applies if—

(a)two or more interests in the whole or part of the residue of an estate are held successively during the administration period by different persons,

(b)the earlier or, if there are more than two, the earliest of the interests is a limited interest, and

(c)each later interest arises or is created on the cessation of the previous interest otherwise than by death.

(2)Income is treated as arising from a limited interest in the whole or part of the residue of the estate in a tax year in cases A, B and C.

(3)Case A is where—

(a)one of the successive interests subsists at the beginning of the tax year,

(b)a sum is paid in respect of one of the interests in that year and before the end of the administration period, and

(c)a person who has or has had one of the interests which is a limited interest (“a limited holder”) is entitled to receive the payment.

(4)Case B is where—

(a)the tax year is the final tax year,

(b)one of the successive interests subsists at the beginning of that year,

(c)a sum remains payable in respect of one of the interests at the end of the administration period, and

(d)a limited holder is entitled to receive the payment.

(5)Case C is where—

(a)the tax year is a year before the final tax year,

(b)the last of the successive interests ceases in the tax year,

(c)a sum is either—

(i)paid in respect of one of the interests in a later tax year but before the end of the administration period, or

(ii)remains payable in respect of it at the end of that period, and

(d)a limited holder is entitled to receive the payment.