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IHT immediately chargeable transfers

There are special rules concerning the liability to IHT on a transfer made during a person's lifetime. Most gifts made during this period are not subject to tax at the time of the gift.

These lifetime transfers are known as 'potentially exempt transfers' or 'PETs'.  The gifts or transfers achieve their potential exempt status if the taxpayer survives for more than seven years after making the gift. If the taxpayer dies within three years of making the gift, then the IHT position is as if the gift was made on death. A tapered relief is available if death occurs between three and seven years after the gift is made.

However, if a transfer does not qualify as a PET, then IHT will become immediately chargeable on the transfer. HMRC’s internal manual lists the following scenarios where transfers may be immediately chargeable:

There may also be an alternative charge on the property transferred under the gift with reservation rules.

There are four other transfers of value that are specifically prevented from being PETs. These are a

Bron: HM Revenue & Customs | 11-05-2021