Date posted: 11th Jul 2025
When planning to pass on wealth to loved ones, it’s important to understand which gifts may be free from Inheritance Tax (IHT). HMRC offers several gift exemptions—some of which are automatic if you meet the conditions.
Here’s a quick overview of the key IHT gift reliefs available.
Annual Exemption – £3,000 Per Year
Each tax year you can give away up to £3,000 IHT-free. If unused, this can be carried forward one year, giving a possible £6,000 exemption in a single year.
Gifts for weddings or civil partnerships are exempt up to:
- £5,000 to a child
- £2,500 to a grandchild or great-grandchild
- £1,000 to others
These must be made before the wedding and the marriage must go ahead to qualify.
Small Gifts Exemption
You can give up to £250 per person, per tax year to as many people as you like—provided they haven’t received any other exempt gift from you that year.
Normal Expenditure Out of Income – Often Missed!
One of the most valuable but underused exemptions is the ability to make regular gifts out of surplus income. To qualify, the gifts must be:
- Regular in nature (e.g. monthly or quarterly ideally)
- Paid out of normal income, not capital
- Leave you with enough income to maintain your usual standard of living
Examples include paying a grandchild’s school fees or regular contributions to a child’s savings account.
Documentation is key—you should keep clear records to show that the gifts meet HMRC’s criteria.
Other Considerations: The 7-Year Rule
Gifts not covered by these exemptions may still become IHT-free if you survive for 7 years after making the gift. This is known as a Potentially Exempt Transfer (PET).
Plan Ahead, Save More
Understanding and using these exemptions can make a significant difference to your estate’s IHT liability. With the right strategy, you can support loved ones during your lifetime—while reducing your future IHT bill.
Need Advice?
We can help review your income, assets, and gifting plans to ensure you’re making full use of available IHT reliefs.
Contact us today to explore your options and keep your estate planning on track.
