What do you think is causing this?

[hesslemount]

Certainly never come across Laetiporus sulphureus on Tilia sp. before nor any other Laetiporus spp.. However the powdery rot especially at the base would fit with this especially if it's got to the heartwood? The fruit bodies are usually quite prolific with this species though, occuring May - Sep (ish). Maybe scrape a small fresh wound and see if a fruiting body materialises due to the presence of a fresh wound and O2. If it is Laetiporus sulphureus (which as I say is rare on Tilia spp.) then expect a brittle fracture and the tree to go if it's got to the heartwood.

 

I presume the lime is Common Lime, T. x europea?

[Andy Collins]

I've had one lime recently with the same symptoms, TPO, so had my TO pop out and confirm and he spotted the Ustilina right at the base amongst the epicormic. I wouldnt have known this otherwise.

[Giles Hill]

Thanks for the comments, I'll take a closer look next time I'm over that way.