Potentially exempt transfers

Copyright © 2024 LexisNexis
Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Potentially exempt transfers

Copyright © 2024 LexisNexis
Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
imgtext

This note explains the concept of a potentially exempt transfer (PET) and describes the tax treatment. A PET is not taxed when it is made and will become either taxable or exempt at some point in the future. For information on transfers which are taxed at the time they are made, see the Occasions of charge and Chargeable lifetime transfers guidance notes.

What is a PET?

A PET is defined as a transfer of value (a gift), which:

  1. •

    is made by an individual during his lifetime

  2. •

    would otherwise be a chargeable transfer, and

  3. •

    satisfies certain conditions relating to the transferee, which differ depending on whether the transfer was made before or after 22 March 2006. These conditions are explained below

IHTA 1984, s 3A

The transfer

The definition covers a personal gift.

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  • 08 Mar 2024 08:50

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