The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Where a transfer is made within seven years of death, an additional charge to inheritance tax may arise at the time of death.
If the transfer was chargeable lifetime transfer (CLT), tax is recalculated at death rates. If the amount of the transfer was reduced by business property relief (BPR), the additional charge to tax is applied to the reduced amount.
Alternatively, IHT may arise if the transfer was a potentially exempt transfer (PET). The amount of the transfer is reduced by BPR before the additional charge is levied, but only if there was an entitlement to BPR at the time the PET was made.
For information on the basic principles of BPR, see the BPR overview guidance note.
See also Simon’s Taxes I7.191.
However, in both cases, the additional charge to IHT will be applied to the transfers without the benefit of BPR unless certain conditions are met.
BPR will reduce the value of a transfer made during the transferor’s lifetime as long as:
the transferee owns the property transferred at the date of the transferor’s death and has done so since he acquired it from the transferor
the property is not, at the time of the death, subject to a binding contract for sale, and
the property qualifies for BPR at the date of the transferor’s death
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