IHTM26154 | Step 4 - four stage grossing calculations: stage 2

From HM Revenue & Customs · Inheritance Tax Manual

The procedure for stage 2 of the four-stage grossing () calculation (making the initial determination of the chargeable estate) is as follows:

A: Find the total value of all the chargeable specific gifts () by adding together the

  • grossed up value at Stage 1 (),

  • the total value of any chargeable specific gifts which do bear their own tax ().

Remember to

  • confine the list to specific gifts at the same title (),

  • reduce the value of the specific gifts as appropriate under the interaction () rules to reflect any Business Relief or Agricultural Relief allowed.

B: Find the total value of all the specific gifts by adding together

  • the total value of all the chargeable specific gifts at A above,

  • the total value of any exempt specific gifts.

The reminder at A also applies here.

C: Deduct the total of the specific gifts at B above, from the value of the estate for Inheritance Tax purposes (the value transferred ()) at that title to find the initial value of residue ().

D: Calculate the part of residue which is exempt.

E: Deduct the exempt part of residue from the total residue to find the chargeable part of residue.

F:Make the initial determination of the chargeable estate by adding together

  • the total at A above, of the chargeable specific gifts,

  • the chargeable residue from E.