Jurisdiction(s):
United Kingdom

Changizi v Changizi: s41(b) IHTA 1984 bars deducting IHT from exempt residue; non‑exempt beneficiary bears charge; Re Ratcliffe followed, Re Benham confined (England and Wales)

Published on: 16 April 2025

Published by a LexisNexis Private Client expert

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Article summary

Changizi v Changizi and others [2025] EWHC 735 (Ch)

The son argued that inheritance tax (IHT) on the estate ought to be taken from the residuary fund before any division between him and his mother, invoking Re Benham's Will Trusts [1995] STC 21. By contrast, the executors split the residue into exempt and chargeable elements, then met the IHT solely from the taxable portion attributed to the son, relying on the later authority of Re Ratcliffe [1999] STC 262.

The High Court (HC) determined that Re Ratcliffe supplies the correct approach, while Re Benham was exceptional and turned on its own facts, setting no general principle. Section 41(b) of the Inheritance Tax Act 1984 prohibits deducting IHT from the exempt share of residue and must therefore be applied. Consequently, the executors’ method—apportioning the residue first and burdening the son’s 1/6 share with the entirety of the IHT—was affirmed.

For further IHT guidance, see Practice Notes: Calculating the IHT charge on death and Grossing up and partly exempt estates.

Case details

Court: High Court of Justice (Business and Property Courts of England and Wales)
Judge: His Honour Judge Jarman KC
Decision date: 2 April 2025

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