Tax-Free Gifts
You are allowed to give away a certain amount without having to pay any tax at all - irrespective of when you give it.
- Gifts between husband and wife or civil partners are tax-free where both are domiciled (have their permanent home) in the UK. Where the recipient is domiciled outside the UK, only gifts up to £55,000 are exempt.
- Money you leave to certain institutions, either during your lifetime or on death, is always free of IHT. These include UK charities and institutions such as museums or universities. They also include UK political parties and community amateur sports clubs.
- Most small gifts are tax-free - you can give an unlimited number of gifts up to £250 each year to different people free of IHT. However, you can't add this exemption to any of the other tax-free exemptions. This is intended to cover birthday and Christmas presents, for example, but can cover other small gifts too.
- Wedding and civil partnership gifts are tax-free up to a certain amount. How much you can give to a couple depends on your relationship with them. Each parent can give £5,000 tax-free; grandparents can each give £2,500; unrelated people can each give £1,000.
- Gifts that come out of your income and form part of your normal expenditure are tax-free as long as they don't reduce your standard of living. Provided that they meet these criteria, they can be for any amount. They could be, for example, premiums for a life insurance policy that is under trust for your children.
- You can also give away £3,000 each year free of IHT. If you don't use this allowance one year, you can carry if forward for one year only. So if you don't use the £3,000 allowance in 2008-2009 you can gift £6,000 tax-free in 2009-2010. You can give someone a wedding gift and a £3,000 annual gift in the same year.
- Maintenance gifts to a current or former husband, wife or civil partner, or to relatives dependent on you through old age or infirmity are tax-free.
- Gifts for the maintenance, education or training of your children in full-time education or aged 18 or under are tax-free.
