Commentary

I3.323A Annual exemption and settled property examples

IHT, trusts and estates

I3.323A Annual exemption and settled property examples

I3.323A Annual exemption and settled property examples

Example 1

On 1 July 2019 L gave up his life interest in settled property then worth £200,000 to his daughter D, the capital beneficiary. This was a PET. On 1 November 2019 he gave notice to the trustees that his 2019/20 annual exemption of £3,000 was available and that £2,000 of his 2018/19 annual exemption was available. L died in March 2020.

The PET becomes chargeable, and the gross chargeable transfer is:

Value of settled property£200,000
Deduct: annual exemptions2019/20£3,000
2018/19£2,000£5,000
Gross chargeable transfer£195,000

Example 2

As

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