Sometimes you need to calculate the gross value of the transfer,
including the tax burden if it is payable by the transferor. The
authority behind this reflects that the tax burden effectively
increases the loss to the transferor’s estate. (
IHTM14547)
Be alert for instances where the transferor pays the tax. You
can find details of such instances in the earlier immediately
chargeable transfers section (
IHTM14541). Also note that instalments
may not apply to these situations.
Generally, grossing only applies to immediately chargeable
transfers and not to failed PETs (
IHTM04057) (unless the transferor is
obliged to pay the tax) or additional charges (
IHTM14572).
Calculate the grossed-up value as you would for grossing-up
specific legacies (
IHTM26011) before arriving at exempt
residue on a death estate. Where the tax rate is 40% you can use
the computerised grossing calculator.
You will have to prepare the calculations manually however
where the tax rate is lower than 40%. (
IHTM14544)
