IHT and PETs

getmore4less

Hitting wrote: »

Thank you , I need to study links more closely!

On the subject of PETs, Does the 7 year rule apply to calendar years or Tax years?

The date of the gift.

They use up the nill rate band, oldest first, once the nill rate band is used up then taper relief comes into play for the newer ones.

Hitting

Are you saying if one spouse of a married couple dies,say two years after making PET then no IHT is paid because it is part of nil rate band!?,such that the joint nil rate band of the surviving spouse is reduced by the amount of the pet!

I thought IHT would be paid at 40% or less if the death had been at say 5years, and surviving spouse would still retain the dual nil rate band.

CLAPTON

Hitting wrote: »

Are you saying if one spouse of a married couple dies,say two years after making PET then no IHT is paid because it is part of nil rate band!?,such that the joint nil rate band of the surviving spouse is reduced by the amount of the pet!

I thought IHT would be paid at 40% or less if the death had been at say 5years, and surviving spouse would still retain the dual nil rate band.

That would be bizarre way of doing it; as IHT would then be payable on gifts when the total estate might be below the IHT allowance.

getmore4less

Hitting wrote: »

Are you saying if one spouse of a married couple dies,say two years after making PET then no IHT is paid because it is part of nil rate band!?,such that the joint nil rate band of the surviving spouse is reduced by the amount of the pet!

Yes thats the way it works

I thought IHT would be paid at 40% or less if the death had been at say 5years, and surviving spouse would still retain the dual nil rate band.
no, PETS only pay IHT if they are in total over the nill rate band, thats when taper relief kick in for the newest first.

It is not just the PETS other assets that are not exempt(eg: spouse,charity) that go to others also reduce the % of the nillrate band unused.

Hitting

getmore4less wrote: »

It is not just the PETS other assets that are not exempt(eg: spouse,charity) that go to others also reduce the % of the nillrate band unused.

Are not other assets that are given to others,also Pets? Or do you mean assets given after death via will?

On previous point I thought I knew how it worked,however Iwas wrong!
So if gifts are given to try and avoid surviving spouse having a large IHT bill, it could work whereby he/she retains that large bill if all nil rate band is gone( if spouse dies early after making a pet)?

getmore4less

Hitting wrote: »

Are not other assets that are given to others,also Pets? Or do you mean assets given after death via will?

the latter

On previous point I thought I knew how it worked,however Iwas wrong!
So if gifts are given to try and avoid surviving spouse having a large IHT bill, it could work whereby he/she retains that large bill if all nil rate band is gone( if spouse dies early after making a pet)?

Since the transferable nill rate band came, in cases where the estate will all pass to the spouse(so no IHT anyway), pre death gifts(PETS) are neutral unless the doner lives 7 years.

The better option can be for the survivor to gift and hope they live for 7 years retaining the transfered nill rate band.

Hitting

I'm please I joined this forum; my knowledge is not as I thought!

One step further, do you have any advice on how to retain assets without having to pay IHT.

I'm aware of allowable gifts, DGT's , but assets reduced in these cases?

getmore4less

Hitting wrote: »

I'm please I joined this forum; my knowledge is not as I thought!

One step further, do you have any advice on how to retain assets without having to pay IHT.

I'm aware of allowable gifts, DGT's , but assets reduced in these cases?

Always double check with other resources preverably checking any HMRC guidence.

google is your friend most questions have been asked and answered somewhere.

vigman

OP just revisiting this issue......

Could anyone please advise what the IHT situation would be if the 2 family members are lent 200K each over a 10 year period, at say 5% interest, with the loan being written off on the death of the lender (which unfortunately will be within 10 years)?

TIA

Vigman

getmore4less

vigman wrote: »

OP just revisiting this issue......

Could anyone please advise what the IHT situation would be if the 2 family members are lent 200K each over a 10 year period, at say 5% interest, with the loan being written off on the death of the lender (which unfortunately will be within 10 years)?

TIA

Vigman

That is equivilent to just giving the money still owing in the will for IHT purposes.