Sibling inheritance on death of child - treatment of investment income

A young child has recently died leaving behind an estate comprised of investments funded from their grandparents. The value of their estate is lower than the inheritance tax nil rate band. Given the age of the child they had no will and therefore inheritance of their assets falls under the rules of intestacy. Based on this, by default, the child's assets will pass to their parents, however the parents would like to renounce their claim and then then assets would pass to the surviving sibling. Where the assets pass to the surviving sibling in this manner, how will the future income realised in the investments be treated. Will it be taxed under the parent's marginal rate as though they made the gift to the surviving sibling by renouncing their claim or will it be taxed under the surviving sibling's tax rate?

Hi,
Please contact the Inheritance Tax team for advice.
Inheritance Tax: general enquiries
Thank you.