Impact of deathAmy gifts £275,000 to a discretionary trust 12 years and 2 months ago 61⁄2 years later, Amy gifts £500,000 to her son Peter
Amy dies 5 years and 9 months later
On estate
The timeline shows the accumulation of gifts on the death estate calculation and you can see that the CLT is not added to the accumulation.
On gifts
* The timeline above shows that the PET is in the 7 years preceding death. This will “fail” and become chargeable.
* Remember the 14 year rule…as the CLT of £275,000 was 61⁄2 years prior to the “failed PET”, even though it was more than 7 years prior to death, it will be brought into the calculation because it was in the 7 years preceding the “failed PET”.
* The CLT will use £275,000 of the £325,000 nil rate band, leaving £50,000 to attribute to the PET and £450,000 of the PET will be chargeable to IHT at 40%, however, taper relief could reduce the amount of tax payable.
