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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Step 4 - grossing up: how to decide whether specific gifts out of the free estate bear their own tax

As a result of IHTA84/S211, specific gifts under the deceased’s Will or codicil normally do not bear their own tax.

The exceptions to this general rule are

  • where there is an express direction in the Will (IHTM12041) or codicil (IHTM12041) that a gift has to bear its own tax - for example a gift of unlisted shares to a son on condition that he pays the tax on them
  • where some legacies (IHTM26133) are made by a variation (IHTM35011) accepted as within IHTA 84/S142, the beneficiary agrees that a gift shall bear its own tax
  • where the gift is of property situated outside the UK - for example a gift of a bank account in Germany - the gift must bear its own tax unless there is a contrary intention expressed in the Will
  • under IHTA84/S42 (4) where legal rights in Scotland are claimed by a person entitled to them

If you have a specific gift which is not within one of these exceptions but which the taxpayer or agent claim bears its own tax, you should refer the case to Technical

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  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)