ExpertEasy2 marksMultiple Choice
ACCA · Question 08 · Inheritance tax
Section A
On 15 August 2023, George gifted a vintage tractor worth £12,000 to his nephew. George had made no other lifetime gifts.
What is the value of the Potentially Exempt Transfer (PET) for Inheritance Tax purposes after applying all available exemptions?
Section A
On 15 August 2023, George gifted a vintage tractor worth £12,000 to his nephew. George had made no other lifetime gifts.
What is the value of the Potentially Exempt Transfer (PET) for Inheritance Tax purposes after applying all available exemptions?
Answer options:
A.
£12,000
B.
£9,000
C.
£6,000
D.
£0
How to approach this question
Deduct the current year's Annual Exemption (£3,000) and any unused Annual Exemption from the previous tax year (£3,000) from the gross value of the gift.
Full Answer
C.£6,000✓ Correct
A gift to an individual is a PET. George can deduct the Annual Exemption (AE) for the current tax year (2023/24) of £3,000. Since he made no previous gifts, he can also utilize the unused AE from the previous tax year (2022/23) of £3,000. The value of the PET is £12,000 - £3,000 - £3,000 = £6,000.
Common mistakes
Forgetting to bring forward the previous year's unused Annual Exemption.
Practice the full ACCA TX — Taxation Practice Exam 3
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