»Ê¹ÚÌåÓýapp

Any part of the annual exemption which is not used in the tax year is carried forward (rolled-over) into the next tax year. It can only be carried forward to the next year and cannot be used in any later years. »Ê¹ÚÌåÓýapp annual exemption should be applied in the following order

• use the annual exemption for the current year first
• then use any part of the previous year’s annual exemption not used in that year
• you cannot use any surplus annual exemption from any earlier year.

Example

Trevor makes the following cash gifts:

• March 2010 - £1,600 to Anne
• June 2010- £2,200 to Brad
• June 2011 - £5,000 to Charlie

»Ê¹ÚÌåÓýapp position in each tax year and for each gift is:

Tax year 2009 to 2010

»Ê¹ÚÌåÓýapp gift of £1,600 is wholly covered by the current year’s annual exemption and a surplus £1,400 is rolled-over to 2010/2011.

Tax year 2010 to 2011

»Ê¹ÚÌåÓýapp gift of £2,200 is wholly covered by the current year’s annual exemption. »Ê¹ÚÌåÓýapp unused balance of £800 is rolled over to 2011 to 2012. »Ê¹ÚÌåÓýapp surplus of £1,400 from 2009 to 2010 is not used and so is lost.

Tax year 2011 to 2012

»Ê¹ÚÌåÓýapp £3,000 for the current year and £800 from the previous year are available. So of the £5,000 gift, £3,800 is exempt. »Ê¹ÚÌåÓýapp balance of £1,200 is a chargeable potentially exempt transfer (IHTM04057).