PET Gifts

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Gnittih
Gnittih Posts: 52 Forumite
in Pensions, annuities & retirement planning
If it is known that the only IHT that is due on an estate is say the result of a gift of £10000. being made within 7years of a persons death which HMRC form needs to be completed?....IHT205 or IHT400

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  • Keep_pedalling
    Keep_pedalling Posts: 16,636 Forumite
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    The executor for any estate where IHT is going to need to be payed or needs to claim the RNRB to avoid it, needs to fill in IHT 400 and the associated supplementary sheets.
  • Gnittih
    Gnittih Posts: 52 Forumite
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    I’ve had a look at IHT205 and section 9.1 requests ‘Gifts and other lifetime transfers (after deduction of allowable exemptions) made in the 7 years before they died. This does not include legacies in the will.’

    Doesn’t this indicate that the Executor would use this form?
  • Keep_pedalling
    Keep_pedalling Posts: 16,636 Forumite
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    Gnittih wrote: »
    I’ve had a look at IHT205 and section 9.1 requests ‘Gifts and other lifetime transfers (after deduction of allowable exemptions) made in the 7 years before they died. This does not include legacies in the will.’

    Doesn’t this indicate that the Executor would use this form?

    No, because right at the top of the form it says it is only to be used where the estate is equal to or or less than the nil rate band, or up to 2 times that where the a transferable NRB can be applied, or where the estate is under £1 and spousal exemption can be applied.

    None of those conditions have been met in your case so you have to go with IHT 400.
  • Gnittih
    Gnittih Posts: 52 Forumite
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    In the case I am considering,...the estate would pass to surviving spouse via the Will, and is not greater than £1m
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    edited 18 January 2020 at 7:47PM
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    Gnittih wrote:
    ...the only IHT that is due on an estate is say the result of a gift of £10000. being made within 7years of a persons death
    Gnittih wrote:
    In the case I am considering,...the estate would pass to surviving spouse via the Will, and is not greater than £1m

    If the estate is going to the surviving spouse, so not using up the nil rate band, why is inheritance tax due on £10,000 of gifts? The PET gift is not exempt because the person didn't survive the 7 years, but it would be within the nil rate band, and the rest of the estate is going to the spouse, but you say IHT is due on the gift?
  • Gnittih
    Gnittih Posts: 52 Forumite
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    Quote: ‘If the estate is going to the surviving spouse, so not using up the nil rate band, why is inheritance tax due on £10,000 of gifts? The PET gift is not exempt because the person didn't survive the 7 years, but it would be within the nil rate band, and the rest of the estate is going to the spouse, but you say IHT is due on the gift?’

    I have been a little confused about the gift, the 7year rule and IHT.However my query was to try and establish which IHT205 or IHT400 applied.Now,from your helping me identify the position wrt to the gift I think it would be IHT205...do you agree?
  • Gnittih
    Gnittih Posts: 52 Forumite
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    bowlhead99 wrote: »
    If the estate is going to the surviving spouse, so not using up the nil rate band, why is inheritance tax due on £10,000 of gifts? The PET gift is not exempt because the person didn't survive the 7 years, but it would be within the nil rate band, and the rest of the estate is going to the spouse, but you say IHT is due on the gift?

    I have been a little confused about the gift, the 7year rule and IHT.However my query was to try and establish which IHT205 or IHT400 applied.Now,from your helping me identify the position wrt to the gift I think it would be IHT205...do you agree?
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