IHTM26131 - Step 4 - grossing up: deciding which type of grossing calculation to use

There are three different types of grossing up (IHTM26121) calculation which are

• a simple (IHTM26141) grossing calculation
• a four stage (IHTM26152) calculation, and
• a ‘Benham’ (IHTM26171) grossing calculation

The simple calculation can be used only when at the same title (IHTM26212),

• all the chargeable specific gifts (IHTM26011) are free of tax (IHTM26123), and
• the residue (IHTM26003) is wholly exempt

The four stage calculation must be used where, at the same title, there are

• chargeable specific gifts which are free of tax, and chargeable specific gifts bearing their own tax and/or
• the residue is wholly or partly chargeable (though, as mentioned in IHTM26151 grossing up is rarely necessary if the residue is wholly chargeable)

‘Benham’ type grossing is very rare and occurs where a testator provides for the residuary beneficiaries to receive specified proportions after all the Inheritance Tax has been paid.