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Can any one help…?
I’ve been reading the HMR&C website and it states the following about IHT Exemptions:
“Annual exemption
You can give away gifts worth up to £3,000 in total in each tax year and these gifts will be exempt from Inheritance Tax when you die. You can carry forward any unused part of the £3,000 exemption to the following year, but if you don’t use it in that year, the carried-over exemption expires.In addition to the annual exemption there are other exemptions for certain types of gifts. These are explained below. Exemptions cannot be combined to increase the amounts given away to the same person.”
Yet… in the BPP Text book it seems to imply that you can combine the exemptions to increse the amount you can give away to the same person ie: page 266 it says Dale made a gift to her son on his wedding day of £153,000. From this amount there are two annual exemptions aswell as the wedding exemption before arriving at the total of £143,000 as the PET.
I’m not sure which to apply in the exam! as the HMR&C seems to contradict the example in the book.Please help
Many thanks
There seems no contradiction. Both BPP and HMRC point out the same thing.
1- Only Annul Exemption(AE) can be carried forward to the next year, so in a year a maximum of 6,000pounds can be deducted as relief.
2- This is what happens in the BPP’s example quoted above, explained below;
Gift Value 153,000
AE(for 2years) (6,000)
Marriage gift exemption (5,000)PET after all reliefs 142,000
Gifts on wedding to immediate children gives a relief of 5,ooo pounds and 2,500 to grand-children.
Hi thanks for your reply.. I was probably not really clear in my other post but when I mentionned they are combining exemptions I meant different types of exemptions ie the marriage exemption and the annual exemptions are being combined. I have looked further into this myself also, and it seems that only the small gifts exemption cant be combined with the annual exemption to increase a gift to the same person but for some reason they allow the mariage exemption to be combined ( It is just not clearly phrased on the HMRC& website).
Thanks again for the reply
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