Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Inheritance Tax Manual

Tax burden on death: received lifetime transfers

The same principles as those outlined at IHTM22074 apply in calculating the net benefit to your deceased when they received an earlier chargeable lifetime transfer. Where the transfer was a failed potentially exempt transfer (PET) (IHTM04057) and the transferor died before your deceased they will, as the transferee, normally have been liable for and have to pay the tax.


Tonya gave Belinda £350,000 cash in August 2007. Tonya died in January 2010. She had made no other lifetime transfers. On Tonya’s death the PET became chargeable. The tax calculation was:


Value transferred £350,000
Less annual exemptions £6,000
Chargeable transfer £344,000


The tax of £7,600 was paid by Belinda, as she was the person liable to pay it.

Belinda dies in July 2011. Quick succession relief (QSR) is now due as there was an increase in Belinda’s estate from the date of the transfer and is calculated as follows:


Chargeable transfer £344,000
Less tax £    7,600
Net increase £336,400


The full calculation is:


(£336,400 ÷ £344,000) × £7,600 × 40% = £2,973


In this example, the transferor died before the beneficiary.  However the order of the deaths could be reversed. If

  • your deceased received a PET from the transferor, and
  • your deceased, as transferee, dies within five years of the PET being made, and
  • the transferor then dies within seven years of the PET being made

it is possible that QSR may be due on any tax which becomes payable on the transferor’s later death. This is known as potential quick succession relief or PQSR (IHTM22080).