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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Step 4 - grossing up: what to do if the value of a gift is dependent upon the amount of an exemption

You might have a case where the value of a gift is dependent upon the amount of an exemption. This is known as a circular situation and an example of this is shown at IHTM26085. If you have a case where this applies you should refer it to the Actuarial Team via your manager. You should set out all the facts and the values of the various ‘gifts’. You should normally have agreed the values of all the other gifts before making the referral but you may make it earlier if your manager considers it is essential because you need to issue a provisional calculation.

A similar situation (IHTM26171) can arise in certain circumstances where the residue is to be divided between exempt and chargeable beneficiaries.