IHTM45003 - Reduced rate for gifts to charity: components of the estate: summary

A person鈥檚 estate (IHTM04029) for Inheritance Tax (IHT) is made up of all the property to which they are beneficially entitled, so there may be a number of chargeable elements to the estate, which IHTA84/Sch1A describes as 鈥榗omponents鈥� of an estate. The reduced rate applies separately to each component that makes up an estate, so it is possible that one component may bear tax at 36% whilst others pay tax at the full rate.

For the purposes of applying the reduced rate, IHTA84/Sch1A/Para 3 divides the aggregate estate on death into three components

  • the survivorship component, (IHTM45004)
  • the settled property component, (IHTM45005)
  • the general component (IHTM45007)
  • It is possible for one or more components to be merged so that the combined component qualifies for the reduced rate (IHTM45035). Property in which a reservation of benefit subsists (IHTM45006) is eligible to be merged with other components, even though it is not specifically identified as a component of the estate.