GROB results in repeated PETs

S.102(4) Finance Act 1986 provides for a deemed Potentially Exempt Transfer on a donor ceasing to reserve a benefit. But nothing is said about the possibility of multiple cessations in the seven years preceding the donor’s death. There are clearly circumstances where this can occur. The donor might cease to give full consideration some years but not others. A daughter given a half interest in her mother’s home might sometimes share occupation and sometimes not.

Have forum members any experience of such situations?

Ray Magill

As far as I’m aware there is no HMRC commentary on the situations postulated and I don’t think the situations are covered by SI 1987/1130.

Malcolm Finney

My understanding is that a PET arises on each occasion, so that if the daughter goes in and out of possession, there will be multiple PETs. However, as the question of whether there is/was a GWR is ascertained at the date of death, there will only be one GWR.

I am sure there is something tucked away in the IHT Manual that says that, if you can find it and read it carefully.

Many a trap for the unwary.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

But there will be lifetime chargeable transfers; the deemed PETs under S.102(4) in the seven years before the donor’s death.

Ray Magill