Curious about how much money can you gift to a family member tax-free UK? You’re not alone—it’s a smart way to share your wealth without triggering inheritance tax, but it can get a bit confusing. In this post, I’ll walk you through yearly exemptions like the £3,000 annual allowance, small gifts under £250, wedding gift limits, surplus-income gifts, the seven-year rule, and more. We’ll keep things easy, conversational, and packed with actionable tips.
How Much Money Can You Gift To A Family Member Tax-Free in the UK?
Each tax year (6 April – 5 April), HMRC lets you give away up to £3,000 tax-free—this is your annual exemption. You can divide it among multiple family members or give it entirely to one individual. If you don’t use your full allowance, you can carry forward the unused amount to the next tax year—but only one year forward.
Can I gift £3,000 to each child in the UK?
Now here’s a question people ask all the time: “Can I gift £3,000 to each child in the UK?” The answer? Not quite.
You have one £3,000 yearly exemption from HMRC, which you may split however you see fit.
- Give the full £3,000 to one child
- Split it between two or more children
- Or combine this year’s and last year’s allowance to give £6,000 to one person (if you didn’t use it the year before)
However, under this law, you cannot donate £3,000 to each kid and expect it to be tax-free. If you want to give more, then you’ll need to look at other exemptions—like surplus income gifts or the seven-year rule.
What counts as a small gift under £250?
You can make multiple gifts of up to £250 per person per tax year, and they won’t count towards your estate for inheritance tax. Just remember: you can’t combine the £250 small-gift exemption with the £3,000 annual exemption for the same recipient in the same tax year.
What Are the Wedding Gift Allowances UK?
When someone gets married, there’s a separate gift exemption:
- £5,000 to a child
- £2,500 to a grandchild or great-grandchild
- £1,000 to anyone else
This can be combined with your yearly exemption, but not the exemption for modest gifts. And yes, as long as it’s given before the wedding, it’s tax-free.
How Can you Give Tax-Free Gifts From Surplus Income?
The term “normal expenditure out of income” refers to this potent exemption. Regular contributions from your excess net income are acceptable as long as:
- The presents are a component of your typical spending habits
- They come from your regular income—not capital
- You make enough money to keep up your typical lifestyle
You can donate as much as your excess income permits; there is no upper limit. Simply maintain accurate records (the exemption is claimed after death using HMRC form IHT403).
What happens if you give more than the tax-free allowances?
Here’s the real meat of it: how much money can be legally given to a family member as a gift in the UK?
Technically, there’s no legal cap on how much you can gift. You could give your daughter £50,000 tomorrow, and there’s no immediate tax. But—if you pass away within seven years of giving that money, it might count towards your estate, and your family could owe inheritance tax.
You are therefore free to donate as much as you desire. But whether it’s tax-free depends on:
- Whether it’s under an HMRC exemption
- Whether you survive for 7 years
- Whether it came from surplus income
- Whether you kept records to prove it
If you die within 7 years of giving more than the exempt amount, the gift becomes a Potentially Exempt Transfer (PET). Taper relief may apply:
|
Years before death |
Tax on gift |
|
0–3 |
40% |
| 3–4 |
32% |
|
4–5 |
24% |
| 5–6 |
16% |
|
6–7 |
8% |
| 7+ |
0% |
Can Married Couples or Civil Partners Boost their Exemptions?
Yes—gifts between spouses or civil partners (both long-term UK residents) are completely exempt from IHT, with no limit. Plus, couples can each use their own allowances. That means you can jointly gift up to £6,000 per year using the annual exemptions, and make wedding gifts and surplus-income gifts independently.
Why Does IHT Gifting Matter Now?
Pensions will be liable to IHT starting in April 2027, while the inheritance tax threshold (£325,000) is set to remain unchanged until 2030. Unsurprisingly, more people are using regular tax-free gifting to get ahead.
Only 430 families claimed the normal-income exemption in 2022–23—despite its huge potential. Experts recommend early planning: making small gifts regularly can avoid big IHT bills later.
“Only 430 families claimed it in 2022–23… better documentation… could prevent beneficiaries from facing unexpected IHT bills.”
What are the common pitfalls when gifting?
- Gifts with reservation of benefit: A gift may still be considered part of your estate if you give it but keep using it, such as if you give your house but live there for free.
- Poor record-keeping: Without bank statements, budgets or IHT403 forms, you may struggle to prove surplus income gifting. That could lead to unexpected tax charges.
- Not mixing allowances correctly: You can’t combine small gifts with annual exemptions for the same recipient. And surplus-income gifts count separately—but small gifts can’t be used with it.
What Are the Rules For Gifting Money to Family Members?
Gifting to family members in the UK is quite flexible, but there are some rules to follow if you want to avoid inheritance tax:
- Stick within your £3,000 annual exemption
- Use wedding gift allowances and modest presents (£250).
- Consider gifting regularly from surplus income
- Keep in mind the seven-year guideline when giving larger presents.
The key is documentation. Keep clear records of what was given, when, to whom, and why.
Do I have to declare a cash gift to HMRC?
For most everyday gifts within your exemption limits—no, you don’t have to declare anything. But if:
- You give more than the exemptions allow
- Or you die seven years after giving a sizable contribution.
Then your executors may need to report it to HMRC using inheritance tax forms, such as IHT403. For gifts from surplus income, it’s good practice to keep supporting documents in case they’re needed later.
Gifting money to family UK
Gifting money to family in the UK is not only legal—it’s encouraged as part of effective inheritance tax planning. Just be mindful of the rules, exemptions, and record-keeping. From funding a child’s wedding to helping with a house deposit, tax-free gifting is a great way to support loved ones during your lifetime, without waiting for a will.
Conclusion
So, how much money can you gift to a family member tax-free UK? In summary:
- £3,000 annual exemption, carry-forward up to one year
- Each person receives a little gift of £250 annually (not including yearly exemption).
- Depending on the relationship, wedding gift restrictions are £5,000, £2,500, or £1,000.
- Surplus income gifts: unlimited if regular and well-documented
- Spouse/civil partner exemption: unlimited between partners
- PETs and seven-year rule protect larger gifts given before death
If you’ve got a long-term plan, gift regularly, keep records, and stay within the rules, you can reduce your estate’s IHT burden—often quite noticeably.
FAQs
- Can I carry forward the £3,000 annual exemption?
Unused yearly exemptions can be carried over to the following tax year, but only for that one year. - Can I use the £250 small gift allowance and the £3,000 annual exemption on the same person?
No—the small gift exemption cannot be combined with the annual exemption for the same recipient in the same tax year. - Do gifts between spouses count towards inheritance tax?
No, gifts between spouses or civil partners who reside in the UK are completely exempt and have no restrictions. - What is taper relief and how does it work?
If you die within 3–7 years of making a gift, taper relief reduces the inheritance tax due (40% down to 0%, gradually over that period). - How can I prove gifts qualify as surplus-income gifts?
Keep clear records: bank statements, income/expenditure summaries, and ideally fill out HMRC form IHT403 yourself.
