Exempt gifts and annual gifting allowances

Last updated 5 December 2024

Gifts between spouses 

Gifts between married spouses or civil partners are free from inheritance tax. 

Annual gifting allowance

Everyone also has an annual gifting allowance of £3,000 every tax year. 

If you don’t use your full £3,000 annual exemption in a tax year, you can ‘carry over’ the remainder and use it the following year. However, you can only use this ‘carry over’ for one tax year.

Small gifts

You can also make small gifts (up to £250) to as many different people as you like, but you cannot use your annual exemption and your small gift exemption on the same person in the same year.

Wedding gifts

Wedding gifts are also free from inheritance tax, provided you keep within certain limits. You can make a wedding gift of up to £5,000 for your child, up to £2,500 for your grandchild, up to £2,500 as a gift to your fiancé, or up to £1,000 to anyone else.  

Gifts to charities, political parties and museums

Inheritance tax will not be paid on gifts made to charities, national museums, universities, the National Trust, political parties and some other institutions such as housing associations. 

You can reduce the rate of inheritance tax (IHT) payable from 40% to 36% if you leave at least 10% of the value of your estate to charity.  

Gifts out of normal expenditure

Gifts can be exempt from IHT where they are made as part of normal expenditure, are made out of income, and the taxpayer is left with sufficient income to maintain their standard of living. HMRC likes to see a pattern of giving or intended pattern of giving, in order to be satisfied such gifts are deemed eligible under gifts out of normal expenditure.

Larger gifts which do not fall within these categories are typically viewed as chargeable lifetime transfers and potentially exempt transfers.  

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