Commentary

I3.361 Fall in value relief—overview

IHT, trusts and estates

I3.361 Fall in value relief—overview

Fall in value relief

I3.361 Fall in value relief—overview

If a person dies within seven years of making a potentially exempt transfer (PET) or immediately chargeable lifetime transfer, IHT or additional IHT may become payable in respect of the transfer as a result of his death.

See I3.311 for further information on PETs, and I3.319 for the remaining categories of immediately chargeable transfer. See also I3.511 and I3.531 for the consequences of the death of the transferor within seven years of either type of lifetime transfer.

However, where the value of the property transferred is less at the time of the transferor's death (or on a prior sale by the transferee or his spouse) than at the time of his gift, relief is available in certain circumstances when computing this tax or additional tax, so that the tax or additional tax is charged on the reduced value1.

The relief must be claimed by a person liable to pay the whole or part of the tax or additional tax2. In the case of a transfer that was immediately chargeable the relief does not give rise to a repayment or remission of the tax that has already become payable during the transferor's life. In addition, it does not reduce the amount of the transfer for the purposes of calculating tax on subsequent transfers3.

Subject to provisions explained below, the relief is available where:

  1.  

    •     tax or additional tax is chargeable on the value transferred by a chargeable transfer or a PET because of

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