Chargeable lifetime transfers (CLTs) – for the TX exam this will always be a transfer into a trust.
IHT is chargeable on a CLT both:
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at the time the gift is made (at lifetime rates), and
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at the time of death (at death rates) if the donor dies within seven years
The following
exemptions are available against lifetime gifts
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Annual exemption (AE):
The first £3,000 of gift each tax year is exempt. Any unused AE is carried forward a maximum
of one tax year for use after that year
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s own AE. The exemption is allocated to gifts on a strict
chronological basis within the tax year.
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Marriage exemption:
A gift in consideration of marriage/civil partnership is exempt up to certain limits:
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For each of the parents of the bride or groom, £5,000
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For remoter ancestors (e.g., grandparents) and for the parties to the marriage, £2,500.
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For anyone else, the exemption is £1,000.
These exemptions, firstly marriage, if available and then annual exemption(s) are deducted from the
transfer of value to compute the amount of chargeable transfer.
The following exemptions, if available, will fully exempt the transfer
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Transfers between spouses and civil partners are ALWAYS exempt ๏
Small gifts. Gifts of up to £250 per donee per tax year are exempt. However, if this limit is
exceeded, the exemption is lost.
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Normal expenditure out of income . For this exemption, the donor must show a regular
pattern of giving. Also, the donor must have enough income left to retain their normal standard
of living.
