R185s for residuary estate with two beneficiaries

Trusts Discussion
1

We act for the trustees of a will trust which is to receive 50% of the residue of an estate, the other 50% passing to an individual. The solicitor acting for the executors has stated that they have advice that if there is a distribution to the individual before there is one to the trust, “all of the income from the estate is regarded as having accrued to the individual’s share (as the income of the estate is deemed to be paid out before capital)”.

The notes for completion of R185E clearly says at Step 1 “Add the net amount of the beneficiary’s share of the income” so we believe that if a beneficiary is entitled to 50% of the residue then they can only be treated as receiving 50% of the income.

Any thoughts?

2

I would disagree with the solicitor and agree that the income follows the residue in the same split (50:50).

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3

I think I have found the clause I was looking for in IT(TOIA) 2005 Part 5 Chapter 6 s667 (2)

“In the case of a person who - (a) has an absolute interest in the whole of the residue of an estate for part of the tax year, or (b) an absolute interest in part of the residue of an estate for the whole or part of that year - the person’s share of the residuary income of the estate is a proportionate part of that income for that year.”