IHTM14573 - 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.

Example

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

Oct 2005	£80,000
July 2008	£60,000
April 2010	£250,000
Total	£390,000

The June 2003 transfer is omitted because it is outside seven years from the date of death. It is a successful PET.