Abatement and Charity Exemption

I am administering an estate that leaves a property (valued at over the NRB) to a specific beneficiary and the residue to charity. There are no specific directions relating to IHT so we are using the usual understanding that the IHT needs to be paid from residue and out of the charity share.

The IHT will use up all of residue (and also part of the property sale proceeds).

My question is relating to the charity exemption. Can we still claim the exemption on the amount of residue hypothetically passing to the charity. My gut feel is that we can, as it is based on a snapshot at death and the administrative/tax expenses shouldn’t be deducted before calculating the exemption. However it somehow feels wrong claiming the exemption when the charity will actually receive nothing…

It is causing a debate in the office and I would appreciate the forum’s views.

michelle collins
Cozens Hardy LLP

You can claim. As you say, testamentary expenses are irrelevant for iht

Simon Northcott