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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: the charge to tax: potentially exempt transfers (PETs): fall in value relief

You may need to calculate the tax on a reduced value if the value of the gifted asset has fallen between

  • the date of the gift, and either
  • the date of the transferor’s death, or
  • an earlier qualifying sale of the gifted asset.

The reduction has to be claimed by the person liable for the tax. There are fuller instructions about fall in value relief later in this section of the manual. (IHTM14621)

If there is a reduction for fall in value relief, it will not affect the value of the chargeable transfer for the purposes of cumulation when you calculate the tax on later transfers, including the transferor’s death.

The value for cumulation purposes remains the same as it was before the relief was applied.