IHTM20402 | Differences between PETA and Discounted Gift schemes
From HM Revenue & Customs · Inheritance Tax Manual
PETA schemes can be distinguished from Discounted Gift schemes (which may also have Pure Endowment and Term Assurance policies) on the basis of the following:
PETA schemes
There was a right of surrender of the Pure Endowment policy.
No withdrawals could be made by the transferor from the Pure Endowment policy.
These were Capital transfer Tax (CTT) avoidance schemes
Discounted Gift schemes
There was no right of surrender of the Pure Endowment policy
Partial withdrawals by the transferor from the Pure Endowment policy were permitted each year
These are CTT/IHT mitigation schemes