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?

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.