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Hi I have been re reading the above article and am a little confused with the exam style q. In that there was a gift of 240 (reduced to 234 with 3k allowances) and this is a PET. There is then a transfer to trust CLT of 300k. Out of the 300k on,y 95k is subject to IHT at 20% with the reduction coming from 7 year cumulative rule (CLT of 120k). My query is why is it not all taxable when a gift of 200k has been made in the same year. Would that not mean tht the 325k available is reduced by firstly 234k and then 120k leaving the CLT fully chargeable?
ThanksYou are confusing 2 separate IHT computations:
(1) The lifetime transfers chargeable when made computation that only considers CLT’s in the use of the available nil rate band (NRB), hence the PET is ignored as it was not chargeable when made and will not be chargeable if the donor lives for 7 years, and
(2) The lifetime transfers chargeable on death computation which considers both CLT’s and PET’s made within 7 years of death, when using the NRB.
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