Section B - Case 3 (Oakfield Farms)

Arthur also made a Potentially Exempt Transfer (PET) of £100,000 to his nephew 4 years and 2 months before his death.

What percentage of taper relief will apply to the IHT payable on this PET as a result of Arthur's death?

Taper relief reduces the amount of IHT payable on a lifetime gift if the donor survives for at least three years after making the gift. The relief scale is: 3-4 years (20%), 4-5 years (40%), 5-6 years (60%), 6-7 years (80%). Since Arthur survived 4 years and 2 months, the tax is reduced by 40%.