IHTM26131 - Step 4 - grossing up: deciding which type of grossing calculation to use
There are three different types of grossing up (IHTM26121) calculation which are
- a simple (IHTM26141) grossing calculation
- a four stage (IHTM26152) calculation, and
- a 鈥楤enham鈥� (IHTM26171) grossing calculation
The simple calculation can be used only when at the same title (IHTM26212),
- all the chargeable specific gifts (IHTM26011) are free of tax (IHTM26123), and
- the residue (IHTM26003) is wholly exempt
The four stage calculation must be used where, at the same title, there are
- chargeable specific gifts which are free of tax, and chargeable specific gifts bearing their own tax and/or
- the residue is wholly or partly chargeable (though, as mentioned in IHTM26151 grossing up is rarely necessary if the residue is wholly chargeable)
鈥楤enham鈥� type grossing is very rare and occurs where a testator provides for the residuary beneficiaries to receive specified proportions after all the Inheritance Tax has been paid.