IHTM12088 - Legacies and devises: abatement caused by grossing up under IHTA84/S38

The chargeable transfer ( IHTM04027) cannot exceed the value transferred on death ( IHTM04044), that is to say, the value of the estate ( IHTM04029) for IHT purposes.

The situation IHTA84/S37 (2) deals with is where after grossing up ( IHTM26121), the total value of all the specific gifts (both chargeable and exempt) exceeds the value transferred, that is the value of the free estate for IHT purposes.

Where this happens you have to reduce the value of the specific gifts so that their total value is the same as the value of the free estate for IHT purposes.

IHTA84/S37 (2) requires you to make this abatement in accordance with any order specified in the deceased’s will and subject to that in accordance with the general law of abatement.

An example of the calculations involved is shown at ( IHTM12086).

You should refer any case involving abatement under IHTA84/S37 (2) to TG.