A relative aged 95 invested in an EIS scheme a little over two years ago. The value of his assets, ignoring the EIS investment, will mean that his estate will be liable to IHT upon his death.
The EIS investment is now free of IHT, however the scheme's design is that it will wind-up after four years, and proceeds will be redistributed as cash to investors. Should he survive until that date - and there is no immediate reason why he should not - this cash will of course become part the estate once again fully exposed to IHT.
To benefit from the current IHT status he wishes to make a lifetime gift of the shares to the beneficiary of his will (however because he obtained income tax relief on the investment he will in fact wait until three years after their issuance in order to avoid claw-back).
Is he right in thinking that in the case of a lifetime gift of EIS shares that are 2+ years old, the gift's IHT exemption is preserved? Putting it another way, upon his death will the normal 7-year rule not apply, and the value of the gift will not need to be counted in a list of potentially exempt transfers made in that period?
I have researched around and it does seem that this is the case, but I would appreciate anyone could confirm, or point me to some official reference to this matter.
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