Potentially exempt transfers

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

This guidance note explains the concept of a potentially exempt transfer (PET) and describes how it is treated for IHT purposes. A PET is not taxed when it is made and will become either taxable or exempt at some point in the future. For information on transfers which are taxed at the time they are made, see the Occasions of charge and Chargeable lifetime transfers guidance notes.

What is a PET?

A PET is defined as a transfer of value (a gift), which:

•
is made by an individual during their lifetime
•
would otherwise be a chargeable transfer, and
•
is a gift to an individual, a disabled trust or a bereaved minor’s trust on the coming to an end of an immediate post death interest

IHTA 1984, s 3A

An ‘individual’ includes the life tenant of a qualifying interest in possession (QIIP). See the Qualifying interest in possession guidance note. This is because such a beneficiary is treated for IHT purposes as beneficially entitled to the underlying trust property. Consequently, in

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Trusts and Inheritance Tax

Outright gifts

Outright giftsAn outright gift is the most straightforward type of gift. It simply involves the outright transfer of property from one person to another with no conditions attached.This type of gift is most suitable for clients who want to pass over modest amounts, or give to responsible and capable

14 Jul 2020 12:22 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more

Personal Tax

Foreign tax relief

Foreign tax reliefIncome and gains may be taxable in more than one country. The UK has three ways of ensuring that the individual does not bear a double burden:1)treaty tax relief may reduce or eliminate the double tax2)if there is no treaty, the individual can claim ‘unilateral’ relief by deducting

14 Jul 2020 11:44 | Produced by Tolley Read more

Tax Returns

Corporation Tax

Foreign exchange issues

Foreign exchange issuesOverview of foreign exchange provisionsForeign exchange (FX) movements are generally taxed following the rules applicable to the underlying income, expenditure, asset or liability on which they arise, broadly as follows:Capital assetsOn a realisation basis (ie on disposal)

14 Jul 2020 11:44 | Produced by Tolley Read more

��Ƶ