Q&As

A Will leaves three pecuniary legacies, free of tax, to the executors and the residue to charity. The amount of chargeable lifetime gifts made in the seven years prior to the death exceed the NRB allowance for the estate. Taking into consideration the legacies made in the Will and the amount of lifetime gifts in excess of the NRB, there will be inheritance tax (IHT) payable. Who is liable for the tax? How is this calculated given that the recipients of those gifts are more than one in number and the amounts gifted all vary?

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Produced in partnership with Graham Stott of gunnercooke LLP
Published on LexisPSL on 25/08/2020

The following Wills & Probate Q&A produced in partnership with Graham Stott of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • A Will leaves three pecuniary legacies, free of tax, to the executors and the residue to charity. The amount of chargeable lifetime gifts made in the seven years prior to the death exceed the NRB allowance for the estate. Taking into consideration the legacies made in the Will and the amount of lifetime gifts in excess of the NRB, there will be inheritance tax (IHT) payable. Who is liable for the tax? How is this calculated given that the recipients of those gifts are more than one in number and the amounts gifted all vary?
  • Transfers of value made on death
  • Lifetime transfers of value

A Will leaves three pecuniary legacies, free of tax, to the executors and the residue to charity. The amount of chargeable lifetime gifts made in the seven years prior to the death exceed the NRB allowance for the estate. Taking into consideration the legacies made in the Will and the amount of lifetime gifts in excess of the NRB, there will be inheritance tax (IHT) payable. Who is liable for the tax? How is this calculated given that the recipients of those gifts are more than one in number and the amounts gifted all vary?

Transfers of value made on death

By section 4(1) of the Inheritance Tax Act 1984 (IHTA 1984), on a person's death inheritance tax (IHT) is chargeable as if immediately before their death they had made a transfer of value, and the value transferred by it had been equal to the value of their estate immediately before their death.

Following IHTA 1984, s 38 the chargeable legacies will each need to be grossed up in order to find the gross legacy which, after deduction of inheritance tax by the executors, would leave the net 'free of tax' figure. Only single grossing up is required in the case where the only chargeable part of the transfer made on death are legacies which bear their own tax and residue is exempt.

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