An executor is also sole absolute beneficiary of the whole estate. The estate includes a property which is generating rental income post-death. It has not yet been assented to her.
Does she have to report the income as executor ( no personal allowances) or can she be treated as the beneficial owner and therefore return a personal tax return? She has after all been the owner in equity since the date of death.
Beneficiaries do not have any legal or equitable interest in assets of the deceased’s estate during the administration period [ITTOIA s 653]. Thus, no beneficiary has any entitlement to either assets or income arising from such assets during this period and hence no charge to income tax arises on their part.
Any income arising during the administration period is thus that of the PRs who must therefore report such income qua PRs [TMA 1970 ss 7 & 8; SA 900]. Note TSEM para 7200 etc.
As there is just one residuary beneficiary who has an absolute interest in residue such beneficiary is subject to income tax on income as and when the PRs pay it to the residuary beneficiary and is thus reportable by the beneficiary for the tax year of payment [ITTOIA 2005 ss 650, 652 & 660].