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Suppose Xyz has a income of 15000£. If he pays school fees of grandchild or neice of 10000£ and makes another PET after that to another person. So will the school fees be taken into consideration for IGT because it will lower the standard of living of XYZ or he will have to dip his capital to maintain standard of living.
Thanks and RegardsThe school fees though if paid annually and therefore being normal expenditure, would clearly not be out of income without impacting on his normal standard of living and therefore the normal expenditure out of income exemption would not apply. These gifts would therefore be PET’s and subject to the normal rules with the AE applied to the first transfer in each year.
Thanks tax tutor. Only in this scenario because of his low annual income, the annual school fees will be considered a PET. In other circumstances, it would be not in scope of Interitance tax, right?
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