Inheritance Tax Act 1984 section 38

Attribution of value to specific gifts

Section 38 sets out how to work out the portion of the value transferred by a chargeable transfer that is attributable to specific gifts, particularly where those gifts do not bear their own inheritance tax.

• The value attributable to a specific gift normally corresponds to the gift's value, but a grossing-up calculation is needed where the gift is chargeable and does not bear its own tax.
• Where gifts exceed an available exemption limit, the excess is first allocated to gifts that do not bear their own tax, and then proportionally by value among the remaining gifts.
• If all chargeable gifts are specific gifts not bearing their own tax, the attributable amount is the total of the gifts' values plus the tax that would be charged on that total.
• Certain liabilities of the transferor that are excluded from the estate valuation under section 5(5) or section 103 of the Finance Act 1986 are themselves treated as specific gifts for these purposes.