ACCA Applied Skills · Taxation (UK) · The basic principles of computing transfers of value
Tomas made no gifts before 2025/26. On 1 June 2025 he gave £2,000 to his friend. On 1 February 2026 he gave £6,000 to another friend. Tomas had no unused annual exemption from 2024/25. What is the total value of the two gifts that is a potentially exempt transfer?
The total potentially exempt transfer is £5,000. The £3,000 annual exemption is applied to the earlier gift first, using £2,000, and the remaining £1,000 reduces the later £6,000 gift to £5,000.
- A£3,000
- B£4,000
- C£5,000Correct
- D£8,000
Explanation
The 2025/26 annual exemption of £3,000 is applied to gifts in chronological order. The first £2,000 gift is wholly covered, leaving £1,000 of the exemption for the second gift. The second gift becomes £6,000 less £1,000, which is £5,000. Total PET is £5,000.
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