Commentary

I12.202 Lifetime gifts generally

IHT, trusts and estates

I12.202 Lifetime gifts generally

I12.202 Lifetime gifts generally

The IHT regime applicable to lifetime transfers is considered in detail in Part I3 of this work. Where it is possible to make outright gifts which do not fall foul of the gifts with reservation of benefit or pre-owned assets rules discussed below the scope for planning is wide and the principles relatively straightforward.

Gifts up to the client's available nil-rate band (£325,000 for the 2014/15 year of assessment (and the foreseeable future)) can be made without any immediate liability to IHT, although if the client dies within seven years the gifts go to increase the amount of IHT due in respect of his estate on death (see the Example below). A gift within the nil-rate band is only effective to save IHT if the client survives the full seven years after the gift, although where the gifted property has increased in value after the gift was made, the increase in value after the gift falls out of charge (provided there was no reservation of benefit by the client) even if death occurs within seven years.

Insofar as any gift exceeds the available nil-rate band, no tax will be payable in respect of a potentially exempt transfer (ie a gift to another individual or to a disabled trust) provided that the client survives the gift by at least seven years; should he die within three years after making the gift the death rate of 40% applies, and if between three and seven years tax will be payable at

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