Readers forum: Grossing-up rate

A client has requested some inheritance tax advice regarding their proposed will. One proposal is that the client as testator will leave residential property to named beneficiaries ‘free of inheritance tax’. The residue of their estate will be left to registered charities.

My question is whether ‘grossing up’ of the specific legacies is required by reference to IHTA 1984 s 38? If so is 40% the appropriate grossing-up rate that has to be used here even though if no grossing up were required the correct rate of inheritance tax charged on the estate would be 36%?

I hope Taxation readers can advise.

Query 19 525 – Masky.

Reply by Tobias Gleed-Owen TEP Hewitsons LLP

Grossing up at 36% is the first step

Masky is correct that if the value of the specific legacies...