Potentially exempt transfers (PETs), the 7-year rule and taper relief (Inheritance Tax Planning)

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Lifetime transfers are one of the most straightforward ways to make sure inheritance tax isn't charged unnecessarily on your death. Potentially Exempt Transfers (PETs) are a type of lifetime transfer that can be beneficial for IHT.
For a PET to be fully exempt from IHT you must survive 7 years, so in this video I explain the 7-year rule and how taper relief is applied.
Other videos you might be interested in:
What is Inheritance Tax and how much is it? - • What is Inheritance Ta...
How the Residence Nil Rate Band tapers for estates over £2m - • How the Residence Nil ...
Thanks for checking out my RU-vid channel - I’m Justin King and my aim is to help people to live successful lives.
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If you're planning your retirement and want to make the best use of your wealth to provide for your family throughout retirement and beyond, or work out how best to pay for a loved one’s care, I may be able to help you.
As a Chartered Financial Planner at boutique retirement planning practice, MFP Wealth Management, I help successful people retire with complete financial confidence.
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This video is for information and entertainment only. Nothing on this channel constitutes financial advice. Please do not make any decisions based on the contents of my videos; seek professional independent financial advice first!

Опубликовано:

9 июл 2024

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Комментарии : 17

@josephdover6822 2 года назад

Hello Justin! Thanks so much for the video! :) Can I ask if a "gift letter" is necessary when someone gifts some savings to their children or grandchildren?

@TheRetirementCafe 2 года назад

Hi Joseph, I would recommend it is important to keep proper records of any payments. A simple letter confirming the nature of any payment, i.e. a loan, an advance, or an outright gift, will usually suffice. If any payment is to be deducted from an entitlement under a Will then a codicil or a new Will should be made.

@andrewharrison6690 2 года назад

Brilliantly clear and very helpful

@johndupont8596 2 года назад

Great video as always Justin! 👍 Would love to know more on the option to insure gifts!

@TheRetirementCafe 2 года назад

Thanks John, will look to cover that in a video.

@baronvonchickenpants6564 Год назад

My mum and dad owned their home as tenants in common, my sister had financial problems, so my father took out a life time mortgage and gave us £50000 each five years ago.last October both parents had to go into full time care due to dementia, my Mother Passed last week and the mortgage company has given us 12 months to sell the house and repay £135000, the house was valued at £425000, we have to sell the house to pay the mortgage and dad's care home fees, is this a tax nightmare??

@bimiuk4051 2 года назад

Hold on a minute! My grandma (abroad) gifted me a plot of land back in 2012 but never declared it in UK as I never thought I had to :/ so ... will I be fined if I declare it now? will I get charged / taxed? Btw, my grandma is still alive. The plot is due for a sale in next 1 - 2 years. value over 100K of Euros. Planning to buy a property with that money. Now unsure how to proceed.

@malcolmhall8068 Год назад

Thanks for the informative video Justin, If my mother were to give me half of her house, and I charged her a market value rent to live in my half of the house, so it is not a Gift with reservation of benefits, what supporting documentation would I need to prove this to HMRC in the event of her death ? I intend to pay 50% of the household bills also (I wouldn't intend to live there with her, at least not full time, is this an issue ?)

@ernestcoelho8514 7 месяцев назад

did you get the reply for this? it is a good maths question.

@andrewscarr8943 5 месяцев назад

Does the seven-year rule operate in tax years, or is it exactly from the date of the gift?

@TheRetirementCafe 5 месяцев назад

Date of gift

@andrewscarr8943 5 месяцев назад

@@TheRetirementCafe , thanks !

@michaelhall2138 2 года назад

One thing is very difficult to find in print is the fact that as well as gifting the tax free money over and beyond the NRB tax free if you survive over seven years you also,when you die,gain another £325,000 NRB after death. Can anyone confirm and ,perhaps,point to this in black and white somewhere.It’s the elephant in the room no one talks about.- or am I completely wrong about this?

@TheRetirementCafe 2 года назад

Hi Michael, this might help? www.gov.uk/inheritance-tax/gifts " The 7 year rule No tax is due on any gifts you give if you live for 7 years after giving them - unless the gift is part of a trust. This is known as the 7 year rule."

@michaelhall2138 2 года назад

Can you confirm that if you survive longer than 7 years that you effectively gain the use of another NRB of £325,000 after death.This another chunk of tax saved- £130,000. I read HMRC but I find it not explicit enough. I probably still don’t understand this after a week of studying the subject.

@michaelhall2138 2 года назад

@@TheRetirementCafe For example,if I gifted £325,000 over 7 years before I died this is tax free, then when I eventually died I believe I would still have the tax free NRB of £325,000?

@TheRetirementCafe 2 года назад

@@michaelhall2138 yes, though you could also give £10million and survive 7 years and have your £325k allowance when you die.