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.
Bernie transferred £250,000 to a discretionary trust on 1 April 2010.
Bernie had previously made the following transfers
June 2003 - £30,000 to his son, Charlie (PET)
Oct 2005 - £80,000 to a discretionary trust (chargeable when made)
July 2008 - £60,000 to his daughter, Debbie (PET)
Bernie died in May 2012
Bernie’s 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
The June 2003 transfer is omitted because it is outside seven years from the date of death. It is a successful PET.