Exempt v Non-Exempt Beneficaries

Since posting this query initially the matter has since been resolved.


Jessica Williams
The Head Partnership Solicitors THP

I’m not sure if I have correctly understood the question, as it seems to be suggesting that the amount of the charity exemption to be claimed will be affected by the administration expenses charged to the estate.

Other than in respect of the costs associated with securing title to assets outside of the UK, administration expenses ae not normally an allowable deduction when calculating the IHT.

On the basis that Radcliffe represents the “norm”, the charity relief should be equal to 10% of the net value of the estate as at the date of death (after allowing for any other reliefs or allowances).

As (at least) 10% of the estate is given to charity, this should reduce the rate of IHT on the rest of the estate to 36%, all of which would be deducted from the non-exempt beneficiaries’ shares.

Paul Saunders

It is Re Ratcliffe almost certainly. Firstly because as I understand it, that is the overwhelming legal assumption. Secondly because 10% of the net estate is less than 10% of the gross estate, and so is if Re Benham applied the estate would not benefit from the reduced rate of IHT.

It honestly sounds to me like you have made a mistake somewhere and it has got so embedded in your brain that you cannot see it. You are just too close to it. Try the following

If the discrepancy is large take very gross figures and work out what the figures ought to out to be very approximately, probably to the nearest £10,000. Then go back and work out why your actual answer is different. Keep to very broad figures. Do not get lost in the pennies. You have made an error of principle and you need to stand back from the detailed figures.

If the discrepancy is smaller, get someone else to calculate the figures, ideally from an example in a book rather than with you giving them instructions. They do not have to get it right but you do have to explain to them afterwards how they have got it wrong. With a bit of luck you will end up identifying your own error.

Ian Mckeever

Ian McKeever & Co Consulting Actuaries.

To add to Paul Saunders’ reply, HMRC have a useful calculator on their website at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/402974/G_up36_per_cent.pdf

Graeme Lindop
Coles Miller Solicitors LLP