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This guidance note explains how to calculate the amount of tax that arises in lifetime on a chargeable transfer (a ‘chargeable lifetime transfer’ or CLT). In general terms the lifetime charge will apply to individuals who gift property into a trust that is subject to the relevant property regime or to a company. See the An introduction to inheritance tax (IHT) and Occasions of charge guidance notes. Outright gifts to individuals and transfers into a disabled person’s trust are potentially exempt transfers (PET) and will not incur a lifetime charge. See the Potentially exempt transfers guidance note. A chargeable transfer is a transfer made by a person and so a company can made a chargeable transfer. How this is attributed to participators in a close companies can be found in the Close companies guidance note.

The calculation of additional tax that arises on death is considered separately in IHT charge on death guidance note.