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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
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Succession: Wills: Legacies and devises: Abatement caused by grossing up under IHTA84/S38

The chargeable transfer (IHTM04027) cannot be more than the value transferred on death (IHTM04044)( which is the value of the estate (IHTM04029) for Inheritance Tax purposes.

IHTA84/S37 (2) will apply where after grossing up (IHTM26121), the total value of all the specific gifts (both chargeable and exempt) is more than the value transferred (the value of the free estate for Inheritance Tax purposes).

Where this happens you have to reduce the value of the specific gifts so that their total value is the same as the value of the free estate for Inheritance Tax purposes.

IHTA84/S37 (2) requires you to make this abatement in accordance with any order specified in the deceased’s Will and subject to that in accordance with the general law of abatement.

An example of the calculations involved is shown at (IHTM12086).