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ACCA Applied Skills · Taxation (UK) · The use of exemptions in deferring and minimising inheritance tax liabilities

Hannah gave her daughter £10,000 on her wedding day in June 2025 and no other gifts that year. Hannah is the daughter's parent. Assume the standard marriage exemption and that Hannah's annual exemptions for 2025/26 and 2024/25 are unused. What is the total value of the gift that is a transfer of value after all exemptions?

The taxable transfer is £0. The parental marriage exemption of £5,000 reduces the gift to £5,000, and the current annual exemption of £3,000 plus the prior-year carried forward £3,000 covers the remaining £5,000 in full.

  1. A£0Correct
  2. B£4,000
  3. C£5,000
  4. D£6,000

Explanation

A parent can give £5,000 exempt on marriage, leaving £5,000. The 2025/26 annual exemption of £3,000 then applies, leaving £2,000. The 2024/25 exemption of £3,000 carried forward covers the remaining £2,000. Therefore nothing is left as a transfer of value.

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