Mark McLaughlin highlights the importance of following the rules closely when seeking to obtain an important inheritance tax exemption.
As a general rule, a cash gift from one long-term UK resident individual to another is a ‘potentially exempt transfer’ (PET) for inheritance tax (IHT) purposes, subject to any available reliefs or exemptions. The gift is assumed to be exempt when made and becomes fully (as opposed to potentially) exempt if the donor survives for at least seven years.
Clearly, it would be preferable if a cash gift was immediately exempt from IHT when made, instead of having to wait for seven years for the PET to become an exempt transfer. <>
