Tyas & Company
Chartered Accountants, Registered Auditors, Tax, Business Advisors
Thursday, 19 September 2019 23:01

IHT and lifetime transfers

There are special rules concerning the liability to IHT of a transfer made during a person's lifetime. For example, most gifts made during a person's life 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 of becoming exempt from IHT 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.

IHT can also be chargeable if the person making the gift retains some 'enjoyment' of the gift made: for example, where an elderly person gifts their home to their children (who usually live elsewhere) and continues to live in the house rent-free. In this case, HMRC will not accept that a true gift has been made and the 'gift' would remain subject to IHT even if the taxpayer dies more than seven years after the transfer.

In addition, transfers into most types of discretionary trusts, those involving companies and transfers into most types of interest in possession trusts are immediately chargeable transfers for IHT purposes.

Consultants

Stephen Tyas                             Stephen Ayres

 

 

Registered to carry on audit work in the UK as GBJ
Limited Liability Partnership by the Institute of
Chartered Accountants in England and Wales

Contact Us

Telephone: 01293 843900

Fax: 01293 614312

Email: office@tyas.com

5 East Park, Crawley, West Sussex, RH10 6AN

 

 

This website uses cookies to manage authentication, navigation and other functions. By using our website, you agree that we can place these types of cookies on your device.   Our Privacy Policy