Inheritance Tax Annual Exemption Scenario Question

moneysaverGB

I was wondering what would happen in the following hypothetical example:

Someone is yet to use their £3000 annual exemption for inheritance tax for the current tax year and they have £2000 left over from the exemption for the previous tax year.

If they give £2000 away this year, I assume that £2000 uses up the £2000 left over from last year and the £3000 from this year can be carried over?  

newatc

Seems sensible but sadly no:

IHTM14144 - Lifetime transfers: annual exemption: roll over provisions

Any part of the annual exemption which is not used in the tax year is carried forward (rolled-over) into the next tax year. It can only be carried forward to the next year and cannot be used in any later years. The annual exemption should be applied in the following order

• use the annual exemption for the current year first
• then use any part of the previous year’s annual exemption not used in that year
• you cannot use any surplus annual exemption from any earlier yea