IHTM14573 - Lifetime transfers: the charge to tax: additional charges: cumulation
For additional charges, you need to recalculate tax using cumulation as you would with a failed Potentially Exempt Transfer (PET) (IHTM14513). In addition to immediately chargeable transfers in the seven years prior to this transfer, you need to include any PETs made:
- before the transfer and
- within seven years of the death.
Example
Bernie transferred 拢250,000 to a discretionary trust on 1 April 2010.
Bernie had previously made the following transfers
June 2003 - 拢30,000 to his son, Charlie (PET)
Oct 2005 - 拢80,000 to a discretionary trust (chargeable when made)
July 2008 - 拢60,000 to his daughter, Debbie (PET)
Bernie died in May 2012
Bernie鈥檚 death turns the July 2008 PET into a chargeable transfer. The cumulation for recalculating the tax charge on the April 2010 transfer is:
Previous chargeable transfers
| Oct 2005 | 拢80,000 |
| 听 | 听 |
| July 2008 | 拢60,000 |
| April 2010 | 拢250,000 |
| Total | 拢390,000 |
The June 2003 transfer is omitted because it is outside seven years from the date of death. It is a successful PET.