Converting a PET into a variation

If a beneficiary of an estate has already made a PET after the date of death, can they subsequently incorporate that gift into a Deed of Variation for the purposes of section 142 IHTA?

Lorraine Wilson
Weightmans

I have always been of the view that once a gift has been made, s.142 IHTA cannot be called upon subsequently to change the IHT position.

The HMRC view that a variation under s.142 must have a dispositive effect would seem to support this.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

(2) Subsection (1) above shall not apply to a variation unless the instrument contains a statement, made by all the relevant persons, to the effect that they intend the subsection to apply to the variation.

s.142(2) is set out above. If the instrument effecting the PET does not contain such a statement, then it is not read back.

Simon Northcott

A beneficiary under a will has two options; after receipt, gift the property inherited to another (a PET/CLT) or utilise s142 to make the gift and avoid treatment as a PET/CLT.

It would seem unlikely that having made a gift (not under s 142) it would then be possible to subsequently then be treated as having been made under s142.

Malcolm Finney