Where the deceased as beneficiary had to bear the tax on the
gift, you must deduct that tax to arrive at the net value of the
increase to the deceased's estate.
Example
T died January 1999 leaving an estate of £350,000. No
business or agricultural relief. By will the whole estate passed to
chargeable beneficiaries. The legacies include one of £4,000
to L subject to L paying the tax on it. The tax on the whole estate
is £50,800.
L dies in July 2000. As L had to bear the tax on the legacy,
the tax has to be deducted to arrive at the net value to L. The
deduction is:
| 4,000 | x | 50,800 | = | 581 |
| 350,000 | ||||
| So the net gift to L is | 4,000 | |||
| Less tax | 581 | |||
| £3,419 |
| The QSR calculation is: | ||||||
| 3,419 | x | 50,800 | x | 80% | = | £397 |
| 350,000 |
Contrast the result in the example at ( IHTM22072) where the legacy was of the same amount, but free of tax.
