Annual exemption (UK inheritance tax)
The inheritance-tax annual exemption can exempt up to £3,000 of qualifying transfers in a tax year, with unused exemption from the immediately preceding year carried forward for one year only. The exemption applies per transferor, not separately to every recipient. Allocation, other exemptions and the classification and timing of transfers must be checked under the applicable rules. The £3,000 amount is stated for the 2025–26 TX-UK assessment basis.
Worked example
For 2025–26, assume a donor has the full £3,000 current-year exemption and £1,000 unused from 2024–25. A qualifying £4,000 gift can be covered by those amounts, assuming no other use or restriction.
Common mistake
Giving a separate £3,000 annual exemption to each recipient, or carrying unused exemption forward indefinitely.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |