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WHEN
CAN AN IHT LIABILITY COME ABOUT?
In simple terms,
the trigger for an IHT charge is when an asset is transferred. This might be for three
reasons:
- It is transferred from one individual to another.
- It is transferred from an individual to a trust.
- It is transferred from a trust to an individual.
It only applies
of the transfer is a gift, as opposed to a “loan” or if it is
purchased at full market value. (If a transfer is made at
below or above market value then the difference would be treated as
a gift).
However, just
because such a transfer is a “trigger” for IHT, it does not
necessarily mean that the tax is due at that time. To explain, it is worth
considering the three types of transfer that there
are:
- Chargeable
Transfers
- Exempt
Transfers
- Potentially
Exempt Transfers (PETs)
Hopefully, these will provide at
least some insight into the various, often common sense, routes to
protect your assets from the taxman.
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