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Where Taxpayers and Advisers Meet

Re Benham calculation

Brightonian
Posts:130
Joined:Wed Aug 06, 2008 3:31 pm
Re Benham calculation

Postby Brightonian » Fri May 13, 2022 12:42 pm

Hello, Has anyone got a formula for a re Benham calculation please? I have been tearing my hair out over some examples I have found which don't actually explain how you get to the gross figure. in my case, I have a residue, before deducting the NRB, of £1,143,583. There are no specific gifts. The residue is divided 94% non-exempt beneficiaries and 6% to various charities. Everything I read says the non-exempt beneficiaries' share has to be grossed-up but doesn't explain how! I have pored over the figures in the examples but can't see how the grossing up is done. There must be a formula but I can't figure it out.

maths
Posts:8430
Joined:Wed Aug 06, 2008 3:25 pm

Re: Re Benham calculation

Postby maths » Sun May 15, 2022 5:46 pm

This can be a bit of a mind blowing area. Two reported cases may be relevant namely Benham and Ratcliffe.

I'm not sure Benham is relevant to your situation.

I suggest applying Ratcliffe:
:
Changeable estate [1,143,583] x 0.94 = 1,074,968
NRB: (325,000)

Taxable estate: 749,968
IHT @ 40%: 299,987

Distribution to beneficiaries:
Charities 68,614
Non-exempt 774,981
HMRC/IHT 299,987

TOTAL ESTATE 1,143,582

Brightonian
Posts:130
Joined:Wed Aug 06, 2008 3:31 pm

Re: Re Benham calculation

Postby Brightonian » Mon May 16, 2022 9:03 am

Thank you very much, Maths. I got to that answer applying Ratcliffe - I'm delighted to learn I got it right! But I think this may be a Benham situation - I'm waiting for the solicitor to get back to me. The will has a clause saying that if any beneficiary of the residuary estate does not qualify for IHT exemption, the shares of the beneficiaries shall be deemed to be of amounts such that after payment of IHT the amounts received by the beneficiaries are the percentages set out in the clause. That sounds like he wants each percentage to be worth the same after IHT. But I'm not a lawyer. I just can't find the formula anywhere.

Brightonian
Posts:130
Joined:Wed Aug 06, 2008 3:31 pm

Re: Re Benham calculation

Postby Brightonian » Mon May 16, 2022 9:38 am

I've also just noticed that the chattels (£2,550) have been left to relatives, so I will have to deduct those before arriving at residue. Back to the drawing board!

maths
Posts:8430
Joined:Wed Aug 06, 2008 3:25 pm

Re: Re Benham calculation

Postby maths » Mon May 16, 2022 11:58 am

Yes, sounds like a Benham. Bummer.

Brightonian
Posts:130
Joined:Wed Aug 06, 2008 3:31 pm

Re: Re Benham calculation

Postby Brightonian » Mon May 16, 2022 12:03 pm

My feelings exactly! Hopefully the solicitor, when she does get back to me, will be able to take me through the calculation. Thanks for all your help, as ever.


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