Foreign Assets and reduced rate for gifts to charity

The deceased died leaving assets of approximately £10.5m
Of this amount, approximately £300k is overseas immovable property.

Deceased is domiciled in the UK.

The deceased left a gift of £1m to charity in his will.

Assuming a NRB of only £300,000 due to prior gifts, is the general component after deducting the NRB £10.2m, or can we exclude the foreign assets, so that the general component is only £9.9m?

My initial thoughts are the former is correct so the gift will not trigger the reduced rate of IHT for the remainder of the estate, and it will be necessary to vary the estate to increase the legacy to charity.

Thoughts welcome!

Charles Fraser
Longmores Solicitors LLP

Is the computation not (Sch 1A):

Step 1 £10.5m - £1m = £9.5m
Step 2 Deduct NRB £300K to give £9.2m
Step 3 £9.2m + £1m = £10.2m
Step 4 Compare 10% x £10.2m with donation of £1m.

Malcolm Finney