Your estate and gifts

Do I need to include every gift Iíve made within seven years?
No. Some outright gifts are exempt. When you are working out your estate, you do not need to include.

  • Wedding gifts of up to £5,000 to each of your children (including step-children and adopted children) or the person that your child is marrying
  • Wedding gifts up to £2,500 to each grandchild or the person that your grandchild is marrying
  • Wedding gifts of up to £1,000 to anyone else
  • Payments for the maintenance of your husband or wife, ex-husband or ex-wife, dependent relatives and, usually, your children who are under 18 or in full-time education
  • Other gifts up to a value of £3,000 in any one tax year, plus any unused balance of £3,000 from the previous tax year (The tax year starts on 6 April in one year and ends on 5 April in the following year.)
  • Outright gifts in any tax year up to a total of £250 each to any number of people, but only if the total of all gifts made by you to the recipient in the same tax year does not exceed £250.
  • The Charitable Donations Gift Exemption - lets you give any amount to any registered charitable organisation.
  • Potentially Exempt Transfers - lets you give gifts of money or other assets over and above the allowances already mentioned. However, you must live for at least 7 years after the gifts have been made. If you die within 7 years, the value of the gift is added back into your estate when calculating if any IHT is due on your death.
  • Spouse Exemption - lets you transfer to your spouse (and Civil Partners from December 2005 too) any assets, no matter how large, without any Inheritance Tax liability.

You can make gifts under more than one of the above headings to the same person and they will be free from inheritance tax.
For example, to a child in the year they marry, you could give £5,000 as a wedding gift plus £3,000 as another gift, and these would be exempt.

This gift could be increased to £22,000 for a married couple if neither have used the £3000 allowance in the previous tax year, then a married couple could make a gift of £3,000 each for this tax year and the last tax year plus £5000 each as a wedding gift)