Hope someone can help me out of a pickle.
Should exemptions for lifetime transfers be taken into account when calculating tax due on death re a PET?
Gift of £500,000 to donor’s daughter on marriage in December 2009.
No other transfers of value in previous 7 years.
Donor dies in December 2010.
In order to calculate the chargeable amount of this PET, should you take into account
a) the marriage exemption of £5,000?
b) the annual exemption of £3,000 for 2009/10 and the same b/f from 2008/09?
I have seen worked examples where the marriage exemption is offset when calculating IHT due on death for a PET but the AE only seems to be offset against CLTs to calculate lifetime IHT.
You take into account the annual exemption even though it is a PET which may never become chargeable. In your example, the gift is a PET of £489,000 (£500,000 less marriage exemption, less annual exemption for 2009/10 and 2010/11).
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