Trusts and Estates
IHT – Gifts losing value
With the gift-giving season fast approaching, thoughts may turn to the Inheritance Tax (IHT) benefits of seasonal generosity.
Naturally, the greatest advantages are secured if the donor survives the making of the gift by at least seven years. If the
gift was an outright gift, it is likely to have been a Potentially Exempt Transfer (PET), which will become fully exempt if
the donor survives for seven years. If the gift was made into trust as an immediately chargeable transfer, that chargeable
transfer will no longer be taken into account in deciding how much if any nil-rate band will be available on the death of
the transferor, or indeed other immediately chargeable transfer more than seven years later. (See s7(b)(ii) IHT Act 1984).