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HMRC internal manual

Inheritance Tax Manual

Potentially Exempt Transfers (PETs): deaths before 17 March 1987

Under the legislation prior to the amendments made in FA 1987, instalments were available for tax on potentially exempt transfers (PETs) (IHTM04057) if both the following conditions were satisfied:

  • the tax attributable to the qualifying property (IHTM30251) was borne by the person benefiting from the transfer


  • the tax was attributable to qualifying property which was owned by the transferee immediately prior to the death of the transferor (or, if earlier, their own death).

Therefore for PETs that became chargeable as a consequence of a death before 17 March 1987:

  • instalments could not be available where the original property was sold and qualifying replacement property purchased


  • instalments were available where the gifted property consisted of unquoted shares or securities which had become quoted before the transferor died.

You will note that the conditions changed for transfers on or after 17 March 1987 (IHTM30241).