UK Accounting Glossary
Annual Exemption is an amount that can be gifted and is not subject to inheritance tax legislation. This amount currently stands at £3000 each tax year.
Annual exemption is a transfer of funds that could be considered a gift under inheritance tax legislation, which currently stands at £3000 per annum and is not subject to taxation under inheritance tax. Civil partners and spouses are entitled to their individual annual exemption. The £3000 amount has not changed since 6 April 1981, however up to this amount can be carried over to the next financial year only, and can be used to cover any gifts that are made in the next financial year.