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HMRC internal manual

Inheritance Tax Manual

Reduced rate for gifts to charity: merger of components: where grossing up and interaction apply

Where an election has been made to merge two or more components, the merger is only for the purposes of establishing which components might qualify for the reduced rate. It does not have the effect of merging titles, for example, in terms of calculating the value of a share of residue (IHTM45035) nor does it affect the rule that titles are treated separately for the purposes of grossing up and interaction.

You should continue to perform the appropriate calculations to arrive at the chargeable value for each individual components, then

  • merge the relevant components,
  • calculate the baseline for the merged estate, and
  • test the total sum passing against the baseline for the merged estate to see if the 10% test is met.