Does 14 year rule apply to solely PET gifts

[pandora_boite]

I am aware of how the 14 year rule applies to when CLT and PET gifts are made, and how the order that these gifts are made is important. If there is no CLT involved however, and only a number of PETs, I did not think that the 14 year rule applied. Is this correct?

I am posing the question because I came across this article which states that serial PET gifting is impacted by the 14 year rule. Have I missed something or is this article incorrect.

http://penguintaxplanning.co.uk/misconception-around-gifts-taper-relief
"This rule is to discourage serial gifting as a means of reducing your estate. Let’s use an example; if you gifted £100,000 in July 2007 and £100,000 again in June 2014 and died before June 2021, the values of both gifts will be entered back in your estate and become subject to IHT. Why? With the fourteen year rule in place, you have effectively reset the seven year clock on the first gift as the initial seven year period was not complete."

[maths]

PETs fall chargeable only if donor dies within 7 years thereof.

Thus PETs made more than 7 years prior to death are irrelevant and ignored.

However, where a PET is made and donor dies within 7 years thereof to ascertain the IHT charge on the PET it becomes necessary to ascertain what other PETs were made before it but still within 7 years off death and also what chargeable lifetime transfers (CLTs) were made within 7 years of the date of the PET even if such CLTs are made more than 7 years before death.

EG
PET1 100k October 2010

PET2 150k October 2014

CLT1 150k October 2016

PET3 375k October 2017

Death October 2019.


Nil rate band (NRB) in 2019/20 325k.


PET1 more than 7 years prior to death. No IHT. Ignore.

PET2 within 7 years. Uses up 150k of 325k NRB but no actual IHT charge.

CLT1 within 7 years. In prior 7 years PET2 used up 150k and CLT1 of 150k uses up a further 150k of NRB (so no actual additional IHT charge on CLT1); this leaves only 25k of NRB left.

PET3 within 7 years. In prior 7 years PET2 used 150k; CLT1 used 150k. Thus, of the 375K PET3, 25k of the NRB applies and 350k of PET3 is subject to IHT at 40%.

Have ignored taper relief and other exemptions for ease of explanation.

[pandora_boite]

Thanks for the clarification