Taxes Consolidation Act 1997 section 803

Special provisions as to certain interests

Section 803 deals with successive interests in the residue of an estate during the administration period, including where a beneficiary with an absolute interest dies before administration is complete, where successive beneficiaries inherit that interest, and where discretionary payments are made from the residue.

• Where a beneficiary with an absolute interest in the residue dies during administration, that interest forms part of his or her own estate, and the personal representatives of the deceased beneficiary are treated as entitled to the residuary income from the first estate.
• Where successive beneficiaries become entitled to the absolute interest in the residue, payments from the residue are allocated first to the earliest beneficiary up to the limit of that person's residuary income entitlement (net of standard rate tax for an Irish estate), then to the next beneficiary, and so on.
• A discretionary payment made from the residue during the administration period is treated as income of the recipient for the tax year in which it was paid, and the standard adjustments for disproportionate Irish tax charges apply.
• Where the estate has both Irish and foreign source income and a recipient has been disproportionately charged to Irish income tax, the income so charged may be reduced in proportion, and the reduced amount is treated as income paid net of standard rate tax.