Transfers of value made by a transferor in any one year are exempt to the extent that the values transferred by them (calculated as values on which no tax is chargeable) do not exceed £3,000.
Where those values fall short of £3,000, the amount by which they fall short shall, in relation to the next following year, be added to the £3,000 mentioned in subsection (1) above.
Where those values exceed £3,000, the excess—
shall, as between transfers made on different days, be attributed so far as possible to a later rather than an earlier transfer, and
shall, as between transfers made on the same day, be attributed to them in proportion to the values transferred by them.
A transfer of value which is a potentially exempt transfer—
shall in the first instance be left out of account for the purposes of subsections (1) to (3) above; and
if it proves to be a chargeable transfer, shall for the purposes of those subsections be taken into account as if, in the year in which it was made, it was made later than any transfer of value which was not a potentially exempt transfer.
In this section "year" means period of twelve months ending with 5th April.
Section 3(4) above shall not apply for the purposes of this section (but without prejudice to sections 57 and 94(5) below).