Mark McLaughlin looks at potentially exempt transfers for inheritance tax purposes and considers when they may (or may not) arise.
Those of a certain vintage will remember ‘Auf Wiedersehen, Pet’, a comedy series from the 1980s. Of course, a PET (potentially exempt transfer) in an inheritance tax (IHT) context has a different meaning. However, the comedy title has a certain relevance in one sense – individuals who make lifetime gifts can say ‘goodbye’ to a PET for IHT purposes after a set period.
What is a PET?
A PET is a lifetime gift that satisfies three conditions: it is made by an individual (on or after 18 March 1986); it would otherwise be a chargeable transfer; and it is broadly a gift to another individual or certain categories of trust.
A PET is assumed to be an exempt gift when made, so no immediate IHT
