Can PETs still be liable to IHT after 7 years?

Cam6265

Browsing the IHT400 Notes issued by HMRC, on p22 in relation to "Earlier Transfers" it states:
"This part of the form is about any gifts made by the deceased (the donor)

in the period before the gifts shown on pages 2 to 4 of the IHT403. To

work out whether tax is payable on any gift, the law says that we must add

it to any chargeable gifts made in the 7 years before the gift concerned.

For example, if the deceased made a gift 6 years before they died, we’ll add

that gift to any chargeable gifts made in the 7 years before the gift

was made."
This seems to imply that gifts may only become exempt from IHT if they were made 14 years before death of the deceased. Is that really the case?

Jeremy535897

The key is the word "chargeable". A gift to an individual is a potentially exempt transfer, and only becomes a chargeable transfer if it fails due to the death of the donor within seven years of the gift. A gift to an individual more than seven years before the donor's death would be an exempt transfer, not a chargeable transfer, and would be ignored.

What this catches is where a donor makes a chargeable transfer (for example a gift to a discretionary trust) say ten years before death, and makes a gift to an individual six years before death (a failed PET). In calculating the tax on that failed PET, you add in the earlier chargeable transfer.

Cam6265

Thanks Jeremy535897 - that is a very helpful clarification.