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

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Owner-Managed Businesses

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more

Personal Tax

Payment of the remittance basis charge

Payment of the remittance basis chargeRemittance basis chargeThe remittance basis charge is an annual charge payable by ‘long-term’ UK residents for the privilege of claiming the remittance basis.Taxpayers who wish to utilise the remittance basis (but do not qualify for it automatically) must pay

14 Jul 2020 12:52 | Produced by Tolley Read more

Personal Tax

Enterprise management incentive schemes

Enterprise management incentive schemesWhat is an enterprise management incentive (EMI) scheme?The enterprise management incentive (EMI) scheme is a tax-advantaged share option employee incentive scheme aimed at small entrepreneurial companies that meet certain conditions. It is designed to assist

14 Jul 2020 11:36 | Produced by Tolley Read more

��˾��ҹ��