IHTM26144 - Step 4 - simple grossing calculations: calculation when there is a lifetime cumulative total in excess of the threshold
Where the lifetime cumulative total (IHTM31413) exceeds the threshold at the date of death and the conditions at IHTM26131 are satisfied, the grossing calculation is
Chargeable specific gifts free of tax 脳 (100 梅 60).
Example
Facts again as in Example 1 at IHTM26142, except that there is a lifetime cumulative total of 拢240,000. The date of death is 1 May 2000. The chargeable specific gifts (IHTM26011) all free of tax (IHTM26003), total 拢264,000. There is also chargeable settled property (IHTM16000) valued at 拢250,000.
In practice, because the lifetime cumulative total exceeds the threshold of 拢234,000, tax at 40% is payable on the whole of the chargeable death estate. Consequently, the full amount of the chargeable specific gifts totalling 拢264,000 has to be grossed up at 40%. The calculation is
拢264,000 (100 梅 60) = 拢440,000
The calculation can easily be checked by deducting tax at 40% from the 拢440,000. Tax at 40% is 拢176,000. The difference is 拢264,000 which is the ungrossed value of the chargeable specific gifts.