Not a real situation (I hope!) but I wondered what might happen if ...
To keep it simple assume that daughter already has assets equal to the IHT threshold and is not married. Also parent after gift still has sufficient assets to be liable for IHT
Parent gave daughter say £300k to buy a house.
Daughter dies after 12 months which would presumably mean her estate was liable to potentially pay IHT @ 40% on the 300K
Treasury therefore take £120k
Parent dies 12 months later.
Question - would the gift to the daughter as a Potentially Exempt Transaction within 7 years of gift (PET)still be counted as part of the parent's estate (which would be the normal situation) or because IHT had already been paid once would it be ignored.
ie if another 40% charge the treasury would have had £260k out of the original £300k in tax in 24 months.
My initial reaction was of course they wouldn't but the way this government works it would not surprise me if they could have their cake and eat it.
Cheers
A