Inheritance tax is charged on the value transferred by a chargeable transfer. The value transferred is measured by reference to the diminution in the value of the transferor’s estate. Where the transferor pays the IHT on the transfer, the diminution in the value of his estate will be twofold: the property or sum gifted and the tax paid. In order to find the IHT payable by a transferor in such circumstances, the value of the gift must be grossed up at the appropriate rate and that rate should then be applied to the gross sum so found.

The calculation is performed as follows:

Step 1

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