IHTM14573 - Additional charges: cumulation

You now need to recalculate tax using cumulation as you would with a failed PET (IHTM14513). In addition to

• immediately chargeable transfers in the seven years prior to this transfer,

you need to include any PETs made

• before the transfer and
• within seven years of the death.

Example

Bernie transferred £250,000 to a discretionary trust on 1 April 2000.

Bernie had previously made the following transfers

June 1993 £30,000 to son (PET)

Oct 1995 £80,000 to discretionary trust (chargeable when made)

July 1998 £60,000 to daughter (PET)

Bernie died in May 2002

Bernie’s death makes the July 1998 PET into a chargeable transfer. The cumulation for recalculating the tax charge on the April 2000 transfer is:

Previous chargeable transfers

The June 1993 transfer is omitted because it is outside 7 years from the date of death. It is a successful PET.