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The IWC Glossary

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Potentially Exempt Transfer

An asset given away to another would be classed as a Potentially Exempt Transfer for Inheritance Tax purposes for seven years from the date of the gift.
If the person who gave the asset away died within seven years the value of that asset would be brought back into the value of that persons estate on sliding scale basis. This sliding scale is known as Taper Relief.
Under current tax rules you are permitted to give away £3000 per year which would not be classed as a Potentially Exempt Transfer. A gift of £3000 would be referred to as an Exempt Transfer.
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