IHTM12087 - Legacies and devises: abatement where there are not enough assets to pay the gifts in full

In this situation the gifts have to abate because there are not enough assets in the estate to meet them in full even if the IHT liability is ignored.

In partly-exempt transfer calculations the rule under IHTA84/S37 (1) is that you should use the abated value of each specific gift, that is £20,000 in the example at ( IHTM12086)

You should consider the extent of abatement by reference to the situation and values at the date of death and not in accordance with actual facts of the administration (which reflect post-death changes and costs).

Where the provisions of IHTA84/S37 (1) applies you should refer the case to TG.