How Much Can I Gift Tax-Free in the UK? (2026/27)

UK gift tax (formally Inheritance Tax considerations) works on multiple exemptions: a £3,000 annual exemption (carry-forward one year if unused, max £6,000 in a single year); £250 small gifts per person per year; wedding gifts of £5,000 to a child, £2,500 to a grandchild, £1,000 to others; gifts out of regular income (no limit if from surplus income not capital); and the 7-year rule for larger gifts — gifts made more than 7 years before death are completely free of IHT. Gifts to a UK-domiciled spouse or civil partner are unlimited and tax-free.

This is the framework for 2026/27.

The big picture: gifts are about Inheritance Tax

UK doesn’t have a “gift tax” per se. Instead, gifts are treated under Inheritance Tax (IHT) rules:

• The recipient receiving a gift doesn’t pay tax at the time.
• The giver’s estate may face IHT on certain gifts if they die within 7 years.
• Gifts above certain thresholds “rejoin” the estate for IHT purposes for up to 7 years.

So whether a gift is “tax-free” depends on:

• The size of the gift.
• The giver’s total estate.
• How long the giver lives after making the gift.

The £3,000 annual gift allowance

The most straightforward exemption.

• £3,000 per tax year that you can give away with no IHT implications, ever.
• The allowance can be used in one gift or split across multiple recipients.
• Unused allowance can be carried forward ONE year only — so maximum £6,000 in a single tax year if you didn’t use the previous year’s allowance.

A worked example:

• 2024/25: gave away £1,500 (£1,500 of allowance unused).
• 2026/27: can give £3,000 (current year) + £1,500 (carry-forward) = £4,500 covered.

Beyond £3,000 per year + one year carry-forward, additional gifts use other exemptions (below) or are potentially exempt transfers (subject to the 7-year rule).

Small gifts exemption — £250 per person

Separate from the £3,000 annual allowance:

• £250 per recipient per tax year.
• Can be given to as many different people as you like.
• Cannot be combined with the annual allowance for the same person — you choose one or the other.

For someone with many recipients (children, grandchildren, friends), the small gifts exemption can cover many separate small gifts without using the £3,000 allowance.

Example:

• 10 grandchildren each receiving £200 = £2,000 total covered by small gifts (10 separate exemptions).
• No use of the £3,000 annual allowance.

Wedding and civil partnership gifts

Specific exemptions for wedding/civil partnership gifts:

• £5,000 from a parent to a child getting married.
• £2,500 from a grandparent or great-grandparent to a child getting married.
• £2,500 from one party of the marriage to the other.
• £1,000 from anyone else.

The gift must be made before or shortly after the wedding/civil partnership.

These exemptions are in addition to the £3,000 annual allowance.

Gifts out of normal expenditure

This is one of the most generous (and underused) exemptions:

• Gifts made from surplus income (not capital) are exempt with no upper limit, provided:
• The gifts are part of your normal expenditure.
• They’re regular (not one-off).
• They leave you with enough income to maintain your normal lifestyle.

So if you have £4,000/month income and only spend £3,000/month on essentials, you could gift £1,000/month (£12,000/year) to a child indefinitely with no IHT implications.

The key is documentation:

• Keep records showing your income, expenses, and the surplus.
• The regularity matters — a one-off £12,000 doesn’t qualify; £1,000/month repeated does.
• HMRC may scrutinise this on death — solid records help.

For wealthy retirees with substantial pension income, this exemption can pass significant value to children/grandchildren during life, avoiding IHT entirely.

Spouse and civil partner exemption

Unlimited and unconditional:

• Gifts to a UK-domiciled spouse or civil partner are 100% IHT-free.
• No limit. No 7-year rule.
• Doesn’t use any of your other allowances.

Note: gifts to a non-UK-domiciled spouse are capped at the IHT nil-rate band (£325,000) per tax year, with the option to elect for UK-domicile status for tax purposes.

Charitable gifts

Unlimited and immediate IHT exemption:

• Gifts to UK-registered charities are 100% IHT-free.
• Gifts to political parties (limited circumstances) are also exempt.
• If 10%+ of your net estate is left to charity, the IHT rate on the rest reduces from 40% to 36%.

The 7-year rule for larger gifts (PETs)

For gifts above the annual exemptions, the 7-year rule determines IHT treatment:

• Gifts made more than 7 years before death are completely IHT-free.
• Gifts within 7 years are Potentially Exempt Transfers (PETs) — they may be taxed if the giver dies within 7 years.
• The IHT charge reduces with time (called “taper relief”):
  • Within 3 years of death: full 40% IHT rate.
  • 3–4 years: 32% (20% reduction).
  • 4–5 years: 24% (40% reduction).
  • 5–6 years: 16% (60% reduction).
  • 6–7 years: 8% (80% reduction).
  • 7+ years: 0% (completely exempt).

A worked example:

• 2020: parent gifts £100,000 to child.
• 2025 (5 years later): parent dies.
• Gift falls into the 5–6 year band (with taper at 60% reduction).
• Effective IHT on gift: 16% × £100,000 = £16,000 (if there’s no nil-rate band remaining to absorb it).

Important: the £325,000 IHT nil-rate band is used by lifetime gifts first, in order of date. So small gifts may not trigger IHT at all on the estate even within the 7-year window.

Combining exemptions

You can use multiple exemptions in the same year:

A wealthy grandparent in one year:

• £3,000 annual allowance.
• £1,500 (carry-forward from last year).
• £250 × 5 grandchildren (small gifts) = £1,250.
• £2,500 wedding gift to one grandchild.
• £6,000/year regular gifts from surplus income (continued).
• Spouse exemption (unlimited).

Total potentially exempt in a single year: substantial — £20,000+ from the listed exemptions alone, plus unlimited regular-income gifts.

What if a gift becomes taxable?

If the giver dies within 7 years of a large gift:

• The gift uses up the £325,000 nil-rate band first.
• Excess gift value above the nil-rate band is taxed at 40% (with taper if 3+ years).
• The recipient is liable for the IHT on the gift in some cases — though this is uncommon in practice and the estate usually pays.

Recipients of large gifts should be aware of the 7-year rule and consider insurance (life insurance on the donor) for the potential IHT liability.

The Residence Nil-Rate Band

In addition to the £325,000 standard nil-rate band, there’s an additional Residence Nil-Rate Band (RNRB) of up to £175,000 when a main home passes to direct descendants (children, grandchildren).

So a single person can pass up to £500,000 IHT-free (£325k + £175k), and couples can combine for up to £1 million IHT-free.

This doesn’t directly affect lifetime gifting but does mean the estate threshold for IHT is higher than many people assume — many gifts may not be taxable even within 7 years.

Worked example: planning gifts in retirement

Margaret is 68, has £800,000 estate including £400,000 home she’ll leave to her children. She has substantial pension income with £20,000/year surplus.

Her gifting plan:

• £3,000/year annual allowance: covers gifts to one child.
• £250 × multiple recipients: covers smaller gifts to grandchildren.
• £20,000/year from surplus income: regular gifts to children/grandchildren, fully exempt.
• Wedding gift in year 5: £5,000 to her grandson getting married.

Over 10 years:

• Annual allowance + small gifts: ~£35,000.
• Surplus income gifts: ~£200,000.
• Wedding gifts: ~£10,000 across the period.
• Total potentially exempt: ~£245,000.

If Margaret dies after 10+ years of this plan, all gifts are exempt (7-year rule + annual allowances + regular expenditure).

Her estate at death (without the gifts): ~£800,000 + further accumulation.

With the gifts: estate at death substantially smaller — likely well within the combined £500k single person allowance (or £1m if she’d been married).

Internal links

• What is the personal allowance and how does it work?
• What happens to my pension when I die?
• What happens to my ISA when I die UK

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This guide is information, not regulated financial advice. IHT planning is complex and depends on your overall estate, family situation and intentions — speak to a qualified UK tax / estate adviser before making substantial gifting decisions.