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In the BPP study text it states: “The first £3,000 of value transferred in a TAX year is exempt from IHT”
Then it gives the following example on page 243:
Dale made a gift of £153,000 to her son on 17 October 2006 on the son’s marriage…
What exemptions are available?
The answer then shows:
17 Oct 2006
Gift to Dale’s Son £153,000
Less Marriage Exemption (£5,000)
Less Annual Exemption 06/07 (£3,000)
Less Annual Exemption 05/06 b/f (£3,000)
PET £142,000My question is: Why does the Annual Exemption of 2005/06 apply if the date of the transfer does not fall in the Tax year of 05/06 (i.e. October 06).
Can anyone help please?
Thanks
Brendan
If you have unused Annual Exemption in the previous year (even if you have no IHT transactions in that year) you can carry it forward to the next year, but the current year has to be used first. e.g. IHT transaction in 2008-09, as long as no gifts in previous year:
Gift x
Less Annual Exemption 08-09 3000
Less Annual Exemption B/f 07-08 3000 (*)As I also understand it if you had say for example 1000 unused from 07-08 this is what would be brought forward (*)
Hope this helps 🙂
Good luck
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