What is a potentially exempt transfer?
A PET is only free of UK Inheritance Tax if you live for seven years after you make the gift.
Gifts that count as a PET are gifts that you, as an individual, make to:
• another individual
• a trust for someone who is disabled
• a bereaved minor's trust where, as the beneficiary of an Interest In Possession (IIP) trust (with an immediate entitlement following the death of the person who set up the trust), you decide to give up the right to receive anything from that trust or that right comes to an end for any other reason during your lifetime.
Other Inheritance Tax frequently asked questions:
- Does a Will help my Inheritance Tax Planning?
- How much is my estate worth for Inheritance Tax?
- How soon will Inheritance Tax have to be paid?
- What Inheritance Tax planning exemptions do I have?
- What is a potentially exempt transfer?
- Will all my gifts be effective for UK Inheritance Tax?
- If I am making gifts or gifts into trusts which order should I do them in?
- If I have an existing trust, do I need to do anything about it?
- If I made an outright gift of over the nil rate band, would I pay any immediate inheritance tax?
'Information is given for general guidance only and specific advice should be taken before acting on any solutions detailed. All information is based on our understanding of current legal and tax practices which are subject to change.
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