Illustration - fall in value relief
In this lesson, you'll learn how fall in value relief works when a gifted asset decreases in value before the donor's death, and crucially, how it affects your nil rate band calculations.
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In this lesson
- 0:00 Fall in value relief explained
- 0:40 Calculating the chargeable gift value
- 1:04 How fall in value relief applies
- 1:38 Nil rate band and death estate calculation
- 2:01 IHT due on the death estate
About this lesson
Fall in value relief reduces the chargeable value of a potentially exempt transfer (PET) to its lower value at death, but only for IHT purposes on that specific gift—the original gift value still counts towards the nil rate band when calculating tax on the death estate. You'll work through a detailed illustration involving a holiday cottage to see how to apply relief correctly and avoid common mistakes when multiple gifts are involved. This concept is essential for ACCA TX (Taxation) students and anyone studying inheritance tax planning. Understanding when relief applies and when it doesn't will help you tackle exam questions accurately and advise clients on the true tax cost of gifting assets that may depreciate over time.
Duration: 3m
Transcript
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