UKWhat lifetime gifts are exempt from inheritance tax?
Certain lifetime gifts are exempt from inheritance tax, including annual gifts up to £3,000, small gifts of up to £250 per person, and gifts made in consideration of marriage or civil partnership.
What the Law Says
The Inheritance Tax Act 1984 sets out several exemptions for lifetime gifts that are not counted toward your estate for inheritance tax purposes — even if you die within seven years.
The most common exemption is the annual exemption: you can give away up to £3,000 worth of gifts each tax year without them being added to the value of your estate. If you don’t use the full £3,000 in one year, you can carry forward one year’s unused allowance — but only for one year.
You can also make as many 'small gifts' as you like, as long as each is no more than £250 and you haven’t used another exemption (like the annual exemption) on that same person.
Gifts made in consideration of a marriage or civil partnership are also exempt — up to £5,000 for a child, £2,500 for a grandchild or great-grandchild, and £1,000 for anyone else.
These exemptions apply regardless of whether you survive seven years after making the gift — unlike potentially exempt transfers (PETs), which only escape tax if you live for seven years after giving them.
Statutory TextIn this Part 'exempt transfer' means a transfer of value which is not a chargeable transfer by virtue of any provision of this Part.
— Inheritance Tax Act 1984, s. 19 — Exempt transfers
What to Do
Keep clear records of all gifts, including dates, amounts, and recipients.
Use your £3,000 annual exemption each tax year — remember you can carry forward one year’s unused amount.
For weddings, confirm the relationship and apply the correct exemption limit (£5,000 for children, £2,500 for grandchildren).
Avoid combining exemptions — e.g., you cannot use both the £250 small gift rule and the annual exemption on the same recipient in the same year.
If making larger gifts, consider seeking professional advice — gifts over exemptions may be PETs and only become fully exempt if you survive seven years.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.