Most lifetime gifts are only potentially exempt — they escape inheritance tax if you survive seven years. But a number of gifts are exempt the moment you make them. No waiting, no taper relief, no seven-year clock. They simply leave your estate immediately.
Gifts to a spouse or civil partner
Gifts between spouses and civil partners who are both UK-domiciled are fully exempt from inheritance tax, with no upper limit and no time condition. This applies both to lifetime gifts and assets left on death. It is one of the most powerful exemptions in UK tax law and the reason many couples leave everything to each other before assets pass to children.
The annual exemption — £3,000 per year
Each tax year you can give away up to £3,000 in total free of inheritance tax. This is your annual exemption. It can be used in one gift or spread across several, to one person or many. If you don't use it in one year, you can carry it forward — but only for one year. So the maximum you can ever use in a single year is £6,000.
Small gifts — £250 per person
You can give up to £250 to any number of individuals in a tax year, completely free of IHT. The only condition: you cannot use this exemption alongside another exemption for the same person in the same year. So if you give someone £3,000 using your annual exemption, you cannot also give them a £250 small gift in the same year.
Wedding or civil partnership gifts
Gifts made in consideration of a marriage or civil partnership are exempt up to set limits depending on your relationship to the couple:
- Parent of the bride or groom: up to £5,000
- Grandparent or remoter ancestor: up to £2,500
- One party to the couple giving to the other: up to £2,500
- Anyone else: up to £1,000
The gift must be made before or on the day of the wedding, and the wedding must actually take place.
EverLedge tracks exempt and non-exempt gifts separately — free to start
Record each gift with its exemption type and EverLedge keeps them correctly categorised, so your executors always see a clear picture.
Gifts from surplus income
This is one of the least-known but most valuable exemptions. If you make regular gifts out of your normal income — not your capital — and those gifts do not reduce your standard of living, they can be immediately exempt from IHT with no upper limit.
The conditions are strict: the gifts must be regular (part of a pattern), made from income rather than savings, and your standard of living must be maintained after making them. Examples include a standing order to a child each month, or paying a grandchild's school fees. Records are essential — HMRC will want evidence that a pattern existed.
Gifts to charities and political parties
Gifts to qualifying UK charities are fully exempt from inheritance tax, both during your lifetime and on death. Gifts to qualifying political parties are also exempt, subject to conditions.
In short
- Spouse and civil partner gifts are exempt with no limit and no time condition.
- The annual exemption covers £3,000 per year, with one year's carry-forward.
- Small gifts of up to £250 per person are exempt.
- Wedding gifts are exempt up to set limits by relationship.
- Regular gifts from surplus income can be exempt with no upper limit.
- Gifts to charities are fully exempt.
This article is general information about UK inheritance tax and is not personal or legal advice. Rules and thresholds can change. Consider speaking to a qualified adviser about your own circumstances.