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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: potentially exempt transfers (PETs)

The transferee is accountable, IHTA84/S216 (1)(bb). This is because the person who receives the gift is liable for any tax on a PET that proves to be a chargeable transfer. In strictness, the transferee is required to specify all appropriate property (IHTM10802) received and the value of that property. The account to be used is the IHT 100. The time limit for delivering the account is 12 months from the end of the month in which the transferor’s death occurred, IHTA84/S216 (6)(aa).

For deaths on or after 9 March 1999, the deceased’s personal representatives must also include any gifts made by the deceased within 7 years of death in theIHT 400, FA99/S105 (1). This means that in most cases you will already have information about PETs made by the deceased and in practice you will only need to ask a transferee for an IHT 100 in exceptional circumstances (IHTM10503).

Different rules (IHTM10831) apply if the transfer resulted from the termination of a qualifying interest in possession.