Under s.113A(5) where the additional conditions are satisfied as
regards part only of the gifted property and not satisfied as
regards the remainder, then a proportionate part of the value
transferred is reduced.
Example
| A made a PET of unquoted shares in favour of B in 2005. The value transferred before relief is agreed at £200,000 on a loss to the estate basis. Before A’s death in 2007 B sells one-half of the holding for £150,000. BR is available on £100,000. |
Where the additional conditions in s.113A are not satisfied the consequences depend on whether the transfer is a failed PET or was chargeable when made. This is a matter for the IHT Caseworker.
When the conditions for relief to be preserved are not
satisfied, the effect of s.113A(1) is that for all purposes -
primarily the tax payable on the transfer and the
transferor’s cumulative total - the
value transferred by a PET is ascertained on the
basis of no business relief.
Example
| In 2003, A gave unquoted shares in a trading company to B. A dies in 2007 but by that time B has given the shares to his son C. The value transferred by the 2003 transfer [say £200,000] is brought into cumulation without any business relief. |
Where the original transfer was chargeable when made, the
value for the purpose of calculating lifetime tax on the gift and
for cumulation with subsequent gifts retains the benefit of
business relief but any (additional) tax payable as a result of the
transferor’s death within seven years is chargeable on the
basis that no business relief is due.
| Additional Guidance: SVM150000 |
