Commentary

I3.525 CLTs made on the same day

IHT, trusts and estates

I3.525 CLTs made on the same day

I3.525 CLTs made on the same day

There are two rules relating to the charge to IHT where there is more than one chargeable transfer made by the same transferor on the same day.

The first rule does not now very often have any application, but when it does it takes precedence over the second rule. The second rule applies in all cases of chargeable transfers made on the same day except in relation to the deemed transfer on death.

The first rule is that the transfers are treated as having been made in the order which results in the lowest value being chargeable1. The main purpose of this rule is to deal with cases where a transferor makes more than one chargeable lifetime transfer (CLT) on the same day and bears the IHT on at least one of them himself. The value transferred may, because of the grossing up provisions (see I3.523), depend on the order in which they are made. In effect this means that transfers in respect of which the transferor bears the IHT are treated as being made before other transfers thus ensuring that the grossing up is carried out at the lowest rate possible2.

This first rule is of less common application under IHT than it was under capital transfer tax because of the wide categories of potentially exempt transfers (PETs) under IHT. Take the scenario where a PET is made on the same day as a CLT that is grossed up,

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