Commentary

I3.521 CLTs—cumulation and tax rates

IHT, trusts and estates

I3.521 CLTs—cumulation and tax rates

Chargeable lifetime transfers (CLTs)

I3.521 CLTs—cumulation and tax rates

The categories of chargeable lifetime transfer (CLT) are summarised in I3.319. These are transfers of value (see I3.511) that are neither exempt transfers nor potentially exempt transfers (PETS), and which are thus chargeable transfers during the lifetime of the transferor1. See I3.311 onwards for further details on PETS and I3.321 for further details on other exemptions.

If the transferor dies within seven years of such a transfer there may be additional IHT to pay (see I3.531 onwards). In practice the principal kind of immediately chargeable transfer before 22 March 2006 was a transfer to a discretionary trust, or any other kind of trust (for example, a trust to accumulate the income) where there was no interest in possession to which an individual is beneficially entitled. In relation to transfers after 21 March 2006, the principal kind of CLT is a transfer into a settlement other than one for a disabled person.

There are two main IHT consequences of a transfer being immediately chargeable — the IHT charge on it, and the addition of it to the transferor's cumulation of chargeable transfers. In addition, the transfer must be reported to HMRC even if no IHT is

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