Lifetime Inheritance Tax
Transfers of value, exempt transfers, PETs, chargeable lifetime transfers, grossing and seven-year aggregation.
How to study the ATT Qualification
Use Finance Act 2025 for the 2026 tax papers, complete the three foundational CBEs early, apply professional ethics throughout and concentrate option practice on the one paper you will enter.
Core concepts
Concept 1
Lifetime IHT begins with the loss to the transferor's estate and classification of the transfer.
Exam cue: Calculate the transfer of value before classifying it.
Concept 2
Exemptions, reliefs, cumulative history and responsibility for tax affect the computation.
Exam cue: Build a seven-year cumulative timeline.
Concept 3
Later death can change tax on lifetime transfers.
Exam cue: Determine who bears tax and whether grossing applies.
Risk pitfalls and guardrails
Using the value received rather than loss to the estate.
Guardrail: Do not use an obsolete tax rate, assume a relief, ignore legal form, submit unsupported information or omit the relevant deadline and ethical response.
Ignoring earlier chargeable transfers.
Guardrail: Do not use an obsolete tax rate, assume a relief, ignore legal form, submit unsupported information or omit the relevant deadline and ethical response.
Applying taper relief to the transferred value instead of tax.
Guardrail: Do not use an obsolete tax rate, assume a relief, ignore legal form, submit unsupported information or omit the relevant deadline and ethical response.
Memory anchors
Transfer of value
Measure the reduction in the transferor's estate.
PET
A potentially exempt transfer may become chargeable on death within seven years.
CLT
A chargeable lifetime transfer can create an immediate lifetime charge.
Cumulation
Use earlier chargeable transfers in the seven-year window.
Grossing
Gross up when the donor bears tax on a chargeable transfer.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
An individual gives £100,000 cash outright to an adult child. What type of IHT transfer is it initially?
A settlor transfers £500,000 to a discretionary trust with no prior chargeable transfers or exemptions. The nil-rate band is £325,000 and lifetime rate 20%, with trustees bearing tax. What immediate IHT arises?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
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