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Hello Sir, may you please help me understand why the answer only deducted the value of CLT on calculating the available NRB.I thought that since the PET and the CLT where made before the CLT in question then both will affect the available NRB according to the 7 year cumulative rule.
Afiya then made various other gifts such that as at 26 January 2020 the total gross
chargeable value of all transfers made in the previous seven years was £220,000
comprising potentially exempt transfers of £100,000 and chargeable lifetime transfers of £120,000.
On 27 January 2020, Afiya made a transfer of value (after all exemptions) of £400,000
to a trust. Afiya paid the inheritance tax arising from this gift.
Transfer of value (after all exemptions) 400,000
NRB at date of gift 325,000
Less: GCTs in last 7 years (CLTs only) (120,000)
PET’s are only taken into account in computing the available nil rate band when calculating the IHT payable on the DEATH of the transferor – and even then ONLY if they were made in the 7 years before death.
When, as here, simply computing the IHT payable in LIFETIME on a CLT, you only consider other CLT’s made in the 7 years before the transfer in establishing the available nil rate band – PET’s are ignored.
thank you so much Sir this was very helpful