Chapter: 2 - Inheritance Tax Mitigation: The Basics

Providing for children: Inheritance Tax

2.10.6

Here the issue is whether the gift is made outright or in trust, no doubt for protection reasons. An outright gift will be a PET (ie free from IHT on the donor’s survival for seven years).  By contrast, a gift into trust (except for a disabled beneficiary) will be an immediately chargeable transfer, free from IHT only insofar as it does not take the settlor’s seven year cumulative total of chargeable transfers over the nil-rate band of £325,000 (in 2010/11 to 2014/15 inclusive).  In either case the chargeable value may be reduced by 100% or 50% business or agricultural property relief.  These issues are developed at 3.3 to 3.5.