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An individual can make gifts larger than £3,000, however if they die within 7 years of making the gift and leave an estate worth more than the Nil Rate Band (NRB), plus any additional threshold available, the excess gift will use up some of the NRB; thus effectively resulting in an Inheritance Tax (IHT) liability on the excess.
An individual can provide gifts of £3,000 each tax year (6 April to 5 April) without these being adding to value of their estate on death. That is what the allowance does. It keeps it out of the estate.
YES each year that amount is used
The £3000 is just not added on it does not get subtracted because it is not included anyway. They gave it away.
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