I am trying to ascertain if Grossing Up applies to a gift in an estate.
As a brief overview, the estate consists of the General estate where there are £420,000 gifts free of tax to non exempt beneficiaries, the remainder to Charity.
The deceased was also a life tenant of an IPDI Trust.
When calculating the IHT, the tax is being apportioned between the two components as per HMRC guidance, as such, the NRB is essentially being apportioned between the two components and then a calculation done to see if reduced rate can apply to either component (certainly the general).
The question I have is when grossing up, you use the value of the NRB to set to calculate any value of tax, but what NRB to use to set, the full £650,000 that is applied across the estate in general, or the apportioned NRB that has been calculated to work out the reduced rate as the figures would be vastly different, i.e if £650,000 is used, there doesn’t appear to be any grossing up that would apply.
Hopefully my explanation makes sense but any views are welcome.