Other Inheritance Tax Exempt Gifts

Inheritance Tax Annual Exemption

You can give away £3,000 in each tax year without paying UK Inheritance Tax. You can carry forward all or any part of the £3,000 exemption you don’t use to the next year but no further. This means you could give away up to £6,000 in an inheritance tax free gift in any one year if you hadn’t used any of your exemption from the year before.

You can use your ‘annual exemption’ with most other exemptions, such as the ‘wedding/civil partnership ceremony gift exemption’. So, if one of your children marries or forms a civil partnership you can give them £5,000 under the wedding/civil partnership gift exemption and £3,000 under the annual exemption – a total of £8,000. You can’t, however use your ‘annual exemption’ and your ‘small gifts exemption’ together to give someone £3,250.

Small Inheritance Tax Planning Gifts

You can make small gifts, up to the value of £250, to as many people as you like in any one tax year (6 April to the following 5 April) without them being liable for Inheritance Tax.
Remember you can’t give a larger sum: £500, for example, and claim exemption for the first £250. You can’t use this exemption with any other exemption when giving to the same person. In other words, you can’t combine a ‘small gifts exemption’ with a ‘wedding/civil partnership ceremony gift exemption’ and give one of your children £5,250 when they get married or form a civil partnership.

Inheritance Tax Gifts As Part of Normal Expenditure

This is a commonly missed option. Any gifts you make from your after-tax income (but not your capital) are exempt from Inheritance Tax if they’re part of your regular expenditure.
This includes:

monthly or other regular payments to someone, including gifts for Christmas, birthdays or wedding/civil partnership anniversaries
regular premiums on a life insurance policy (for you or someone else)

You need to be able to prove affordability so it’s a good idea to keep a record of your after-tax income and your normal expenditure, including gifts you make regularly. This will show that the gifts are regular and that you have enough income to cover them and your usual day-to-day expenditure without having to draw on your capital.

Wedding/Civil Partnership Ceremony Tax Free Gifts

Wedding or civil partnership ceremony gifts (to either of the couple) are exempt from UK Inheritance Tax up to certain amounts:

parents can each give £5,000
grandparents and other relatives can each give £2,500
anyone else can give £1,000

You have to make the gift on or shortly before the date of the wedding or civil partnership ceremony. If it is called off and you still make the gift, this exemption won’t apply.

Maintenance Tax Free Gifts

You can also make Inheritance Tax-free maintenance payments to:

your husband or wife
your ex-spouse or former civil partner
relatives who are dependent on you because of old age or infirmity
your children (including adopted children and step-children) who are under 18 or in full-time education

Call one of our Inheritance Tax Advisers on 0800 0112825 or complete the
enquiry form in confidence to see how we can assist you with the issue of tax free gifts or any others.

Click on the links below to discover more solutions to Inheritance Tax.