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HMRC internal manual

Inheritance Tax Manual

Tax burden on death: summary

The Inheritance Tax (IHT) paid on the earlier chargeable transfer (IHTM04027) cannot have increased your deceased’s estate. So you have to ensure that your calculation of the assets your deceased received does not include the tax paid on them.


Jonathan died in July 2011 having received the entire free estate of Simon who died in January 2008. Simon’s death estate, wholly chargeable, consisted of:


Lifetime transfers £350,000
Free estate £155,000
Settled Property   £58,000
Total chargeable transfer £563,000


The IHT on the free estate was £62,000. It has all been paid.

The increase in your deceased’s estate was:

Value of earlier free estate as agreed for IHT £155,000
Less tax on that value   £62,000
Net value after tax   £93,000


Where the earlier transfer was on death, in general

  • pecuniary legacies and specific gifts are normally paid free of tax (IHTM22072) unless it specifically says otherwise in the Will or variation.
  • gifts of residue (IHTM22074), foreign property, settled property and joint property bear their own tax (IHTM22073).