The TACS Partnership highlights a generous but often overlooked inheritance tax exemption.
When considering a lifetime gift of cash between individuals, the natural tendency for some taxpayers and advisers is to focus on the inheritance tax (IHT) potentially exempt transfer (PET) rules, and the availability of the nil rate band in case the donor dies within the following seven years.
How generous!
However, in some cases it may not be necessary to wait seven years for the gift to become an exempt transfer, or to worry about the nil rate band being used on the donor’s death within that period.
The IHT exemption for normal expenditure out of income (IHTA 1984, s 21) is very generous but often overlooked. There is no statutory upper limit to the exemption
