Business, Legal & 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.
The most common method for minimising a liability to capital gains tax is to ensure that the annual exemption is fully utilised wherever possible.
Each taxpaying individual in the UK is entitled to an annual exemption of £9,200 on capital gains for the current tax year. This means that they can make this level of gains (on for instance share sales) without paying capital gains tax.
For exemptions relating to inheritance tax, see ‘inheritance tax’.
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This glossary post was last updated: 26th April, 2020 | 67 Views.