IHTM14512 - PETs: tax treatment of a PET followed by death

If the transferor dies within seven years of making the PET ( IHTM04057),

• the potential exemption is lost and the PET becomes a chargeable transfer
• the transfer must be cumulated with the death estate ( IHTM14503)
• the transfer must be cumulated with any later lifetime transfers, and
• the value transferred (after cumulation with earlier transfers) may become chargeable in its own right ( IHTM14513).

Although the transferor’s death triggers the charge to tax,

• you do not treat the lifetime transfer as a transfer made on death for the general purposes of the IHTA

and

• you do not deem the gifted property to be part of the transferor’s death estate (except where a GWR benefit extends to death and you use the date of death value.)

You can find explanations of the persons liable for any tax on a PET separately in the manual. ( IHTM30011)