Failed PET and reduced rate calculation

Jotiho

If an estate involves a failed PET does the amount by which the total of lifetime transfers exceeds the nil rate band affect the “baseline amount” threshold for reduced IHT on the rest of the estate?

For example, suppose the total lifetime transfers within the seven years preceding death is £400k and the value of assets in the estate on death is £600k and the residential nil rate band does not apply is the baseline amount £600k or £675k (£600k plus £400k minus £325k)?

 Can the reduced rate ever apply to the amount of the failed PET (in this case £75k)? I assume not, since the tax is (in the first instance) payable by the recipient not the estate.

 I have not be able to find any clear guidance on the HMRC documentation of these questions and be grateful for the forum’s thoughts.

Linton

I suggest you post in the Life&Family/MarriageRelationship&Families/DeathFunerals&Probate forum where the experts on IHT are to be found.