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Inheritance Tax Made Simple by Andrew Komarnyckyj

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1.15 The IHT charge on gifts (PETs and chargeable transfers)

1.15.1 Potentially exempt transfers (PETs)

While most significant transfers of value are made on death, transfers of value (including major transfers) can be made during an individual’s lifetime. One of the most common forms that a lifetime transfer of value can take is a straightforward gift from one individual to another.

Such a gift is known as a potentially exempt transfer, or a PET.

The name ‘potentially exempt transfer’ indicates that it is a transfer of value that is potentially exempt from inheritance tax at the time that it is made – but that it is necessary to wait (for seven years) and see whether it actually becomes exempt from inheritance tax. If the person who ...

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