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Dear Tutor, In the note chapter 23 example 2, computing the nil rate band needs to take account of first lifetime gifts (1 October 2002 £100,000 cash to son), because it made within the 7 years prior to the PET ( 1 September 2009 £296,000 cash to daughter).
would you please help me?
many thanksIf a PET was made more than 7 years prior to the death of the taxpayer then it was not chargeable when made, it is not now chargeable on death and it has no effect on the use of the nil rate band – it will have no effect on the IHT computation therefore! The only small possible issue is that if it preceded a CLT in a tax year then it would have used any available annual exemption(s). Thus in the example above the PET of 1 October 2002 is ignored in the IHT computations.
If a CLT occurred more than 7 years before death then it will not be chargeable on death BUT it will have a cumulative effect in terms of the use of the nil rate band. If the 1 October 2002 transfer had been a CLT then this would have had a cumulative effect on the use of the nil rate band when calculating the tax on the PET in September 2009
Have you watched the lecture?
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