IHTM22051 - Calculating QSR: summary and formula


You allow QSR ( IHTM22041) by reducing the tax charged on the whole of the death estate

  • by a percentage
  • of the tax charged on the earlier transfer
  • so far as that transfer increased the deceased's estate.

If the tax charged on the earlier transfer was on settled property in which the deceased had an interest in possession ( IHTM16061), very exceptionally you will have to restrict the QSR on the deceased's death because part of the tax has been allowed against a lifetime transfer. QSR on settled property (IHTM22090) is discussed later in this section.

Subject to this qualification, the amount of the reduction depends on

  • the appropriate percentage, which is based on the length of time between the earlier transfer and the death
  • the amount of tax on the earlier chargeable transfer ( IHTM04027)
  • and the extent to which the earlier chargeable transfer increased your deceased's estate, which involves a comparison between
  • the increase in the deceased's estate because of the earlier chargeable transfer; and
  • the value of the whole of that chargeable transfer.

Expressed as a formula, the calculation is:

AxBxC
D

WhereA=Amount of increase of deceased’s estate ( IHTM22054)
B=Tax on earlier chargeable transfer ( IHTM22053)
C=Appropriate percentage ( IHTM22052)
D=Value of earlier chargeable transfer ( IHTM22053)


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