chargeable transfer

chargeable transfer

n
(Accounting & Book-keeping) a transfer of value made as a gift during a person's lifetime that is not covered by a specific exemption and therefore gives rise to liability under inheritance tax
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However, this is far from straightforward as there is a reasonable amount of work required and checks which must be conducted, particularly as the transfer is either a potentially exempt transfer or a chargeable transfer when it is placed into the trust.
Under any new legislation, if property is transferred into a trust in which the giver or their partner retains a future interest, there will be a chargeable transfer for IHT purposes when the future interest comes to an end and the person becomes entitled to an actual interest under the trust.
No death involved David made a chargeable transfer of 200,000 [pounds sterling] into trust A in January 2008, and another chargeable transfer of 300,000 [pounds sterling] to trust B in May 2008.
David's annual 3,000 [pounds sterling] exemptions for 2007/08 and the previous year are deducted from the gross transfer of 200,000 [pounds sterling] in January 2008, leaving a net chargeable transfer of 194,000 [pounds sterling].
A IF your mother gives you money (and it is more than pounds 3,000 a year) then she will, for IHT purposes, be making a potentially exempt transfer which would become a chargeable transfer if she dies within seven years.
It is possible to place a life insurance into a trust but there is quite a bit of work involved and checks that need to be carried out, particularly as the transfer is either a potentially exempt transfer or a chargeable transfer when it is placed into the trust.
The move meant that "interest in possession" (IIP) and "accumulation and maintenance" (A&M) trusts, originally treated as PETs, are now considered to be discretionary trusts and classified as chargeable transfers.
If you are planning to reduce your inheritance-tax liability remember that transfers of assets between husband and wife are exempt but that on death other cumulative chargeable transfers are taxed at 40pc on amounts over pounds 250,000.