Commentary

I3.322B Annual exemption and termination of reservation of benefit

IHT, trusts and estates

I3.322B Annual exemption and termination of reservation of benefit

I3.322B Annual exemption and termination of reservation of benefit

The donor of property subject to a reservation (see I3.401) is treated as making a disposition of the property at the time when it ceases to be subject to the reservation and that disposition is a potentially exempt transfer (PET)1 — see I3.435.

Where this becomes chargeable as a result of the transferor's death within seven years, HMRC practice is not to reduce this potentially exempt transfer by any available annual exemption2. HMRC's reasoning for this is that a PET is a transfer of value which but for the provisions

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