Christmas shopping usually means a visit to the high street or browsing online retailers, but the season of giving can be a good time to make sure you’re maximising your opportunities for inheritance tax reliefs, whether to family, friends or charity, while spreading some seasonal cheer.

While larger gifts may be taken into account, anyone can make smaller gifts or gifts out of surplus income without it being taken into account for inheritance tax purposes, as long as certain rules are followed.

Broadly, these come under two headings: gifts where the allowance is automatic if the gift fits the rules, and those where the exemption must be claimed after death, such as gifts out of surplus income. The automatic allowances include gifts to charities or political parties, gifts on marriage or civil ceremony, an annual exemption of £3,000, and small gifts up to £250 per person.

Any number of so-called small gifts can be made each year, of up to £250 per recipient, with no limit on the number of recipients, as long as no one person receives more than £250. If anyone receives more than £250, then the whole small gift exemption in relation to that recipient is lost for the year, not just the excess.

Alongside, the annual exemption of £3,000 can be used to make gifts to one or more people. There’s an added benefit if the allowance isn’t fully used in any year, as any remaining allowance can be carried forward one year. It cannot be combined with the small gift exemption for any one individual. It is important to note that the annual exemption is £3,000 in total, not £3,000 per recipient.

In any tax year, you can also give a cash gift when a friend or family gets married or has a civil ceremony. The limit is £5,000 for a child and £2,500 for a grandchild, or £1,000 for those outside immediate family, whether a friend, niece or cousin.

And if giving to charity is important to you at Christmas, it’s worth knowing that gifts to charities and political parties will not count towards the total taxable value of your estate.

These allowances are automatic, unlike the gifts from surplus income, but even so, you should track any gifts as it will help to ensure that you keep inside the rules, and makes it easier in any later dealings with HMRC.

When it comes to relief on gifts from surplus income, record-keeping is essential and you should take expert advice as the gift will only qualify for exemption if a number of rules are followed.

Making gifting part of an annual review is a good idea as the rules do change from time to time, and it is good practice to check back what you’ve done each year, just as it’s important to keep your will up to date as circumstances change.

And if you’ve reached the end of inspiration on gift ideas for your spouse or civil partner, it’s worth remembering that you can give them as much as you like during your lifetime (for Inheritance Tax purposes), as long as they are living permanently in/domiciled in the UK.

For further advice about gifting and Inheritance Tax please contact Gill Knowles, Head of our Wills, Trusts and Estates Team on 01244 356 789 or email


This is not legal advice; it is intended to provide information of general interest about current legal issues.


T 01244 356789

“I would not hesitate to recommend Cullimore Dutton to my friends. I have received professional care throughout.”