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The residue of an estate is held on life interest trusts for an adult beneficiary who is a higher-rate taxpayer. The executors' estate accounts show net bank interest of over £3,000 arising over three years. However, the income shown as due to the life interest beneficiary (paid in the final year) amounts to little more than £600. This is because the income account includes deductions for interest on inheritance tax, and the costs of insurance, council tax and water rates arising on an empty property before sale.
The residue of an estate is held on life interest trusts for an adult beneficiary who is a higher-rate taxpayer. The executors' estate accounts show net bank interest of over £3 000 arising over three years. However the income shown as due to the life interest beneficiary (paid in the final year) amounts to little more than £600. This is because the income account includes deductions for interest on inheritance tax and the costs of insurance council tax and water rates arising on an empty property before sale. In contrast there is no deduction for any of the large accountancy fees which are all shown as general administration expenses.
If one were to follow HMRC's 2006 guidance on trustees' management expenses it would appear that the property expenses should not reduce the beneficiary's estate income for accountancy purposes as they are more of a...
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