Potentially excempt gifts and Inheritance Tax

snollygoster7

Afternoon all..

So I think it is commonly known that there is a 7 year rule for potentially exempt gifts. Simple example, £50k gift given to child, parent survives for over 7 years : no IHT payable

Now, there is also a 14 year rule, where if another gift is given within the above 7 year period, then the time is reset. However, it appears to only relate to trusts (they call them CLTs Chargeable Lifetime Transfers) but it's confusing to say the least.

So my basic question is this:
If a cash gift was made 5 years ago and parent wanted to make another now, does the second gift affect the 7 year period on the first, or once the 7 years are up on the first gift, thats it regardless and the second gift ?

My understanding is that as long as they are purely PETs (eg a cash gift) then one doesn't affect the other fot IHT purposes but the 14 year rule is confusing, however I believe it only affects trusts - can anyone confirm ?

Thanks

Keep_pedalling

If both were straightforward gifts with no tusts involved then no, the gift given 5 years ago is not effected and will still become exempt in 2 years time.