Inheritance tax gift allowances: the fixed exemptions, year by year

The yearly allowance and its one-year memory

The annual exemption is the one most people have heard of. GOV.UK sets it at £3,000 of gifts each tax year (for 2026/27, 6 April 2026 to 5 April 2027). It can go to one person or be split among several, and it is exempt the moment it is given: the 7 year rule never looks at it. What is not used can be carried into the next tax year, but only that one. So a year with nothing given followed by a generous one allows £6,000, and a second idle year simply loses the first year's balance.

GOV.UK's illustration follows a father called Mark, and it is worth running with the parameter file rather than reading.

Neither gift needs Mark to survive 7 years. Had he given Sarah one pound more, that pound would have been an ordinary gift, set against the nil-rate band if he died within the period, as explained in the ${h.P.iht.giftYears} year rule guide.

The one-year limit is what catches people out. Someone who gives nothing for three years and then makes a large gift does not get three years of allowance, only this year's and last year's. The exemption is not something to save up; it is closer to a use-it-or-lose-it entitlement with a single year of grace, which is why families who use it tend to do so as a routine each spring rather than in one go.

Presents of up to £250

Birthday and Christmas money is covered by a separate exemption. Any number of people can each receive up to £250 in a tax year, so long as the same person has not had another allowance from the same giver. The condition matters more than the amount. A grandmother who gives her eldest grandchild £1,500 from the annual exemption cannot also give that grandchild an exempt £250 the same year; her other grandchildren, who had nothing else, can each have one.

Wedding and civil partnership gifts

A gift made on a marriage or civil partnership has its own allowance, set by the giver's relationship to one of the couple.

GOV.UK's example has a parent giving a child £5,000 for the wedding and £3,000 under the annual exemption in the same tax year, £8,000 in all with no tax. Two parents each have their own allowances, so the figures double for a couple giving together.

Spouse, civil partner, charity and party

Some gifts are exempt without any ceiling. Gifts between spouses or civil partners are free of inheritance tax when both live in the UK. Gifts to charities and to political parties are exempt too. From 6 April 2027, section 69 of the Finance Act 2026 carries the spouse and charity exemptions over to pension benefits paid on death, so a pension that goes to a surviving partner or to a charity is outside the tax just as a legacy would be. A charity gift can also lower the rate on the rest of the estate, covered on the charity rate page.

Which allowances stack and which do not

GOV.UK's rules on combining fit in three sentences. A wedding gift can be combined with any other allowance for the same person except the small gifts one. Gifts out of normal income can likewise sit on top of any allowance other than small gifts. The small gifts exemption itself only works for someone who has received nothing under another allowance. In practice that means one person can receive a wedding gift, part of the annual exemption and regular payments from income in the same year, while £250 presents are kept for everybody else.

Used together in a single year with a wedding in the family, the fixed allowances add up faster than the headline figures suggest. A parent with last year's annual exemption still unused, a son marrying, a granddaughter marrying and 6 other relatives receiving small presents can give £15,000 that year without any of it entering the estate. The calculator above adds up the same combinations for any year.

One grandmother's year, gift by gift

The rules are easier to follow on a real list. A widowed grandmother who gave nothing last tax year has two years of annual exemption to use. This year she helps her daughter with £4,500, gives a grandson £4,000 when he marries, sends £250 to each of her four other grandchildren, gives £1,000 to a friend's son on his wedding day and gives £2,000 to a neighbour who looked after her.

Every gift but the last is out of the estate for good. The neighbour's gift is not taxed now either: it becomes an ordinary gift that counts only if she dies within 7 years, and even then it would normally fall inside her nil-rate band, where it uses band rather than creating a bill. Had she sent the neighbour £250 instead, it would have been exempt, because the neighbour received nothing else from her. The grandson could not have had a small gift on top, since he already received two other allowances.

Their weight next to a pension in the estate

From 6 April 2027 unused pension funds count as part of the estate, and the comparison with these allowances is sobering. Take a widowed grandfather with both of his late wife's bands, a £500,000 home going to two children, £400,000 of savings and a £350,000 pension, who dies at 82. The engine compares his estate with money kept and with the same money given away within the exemptions over 10 years.

A decade of the annual exemption saves £12,000 of inheritance tax, and a busier pattern of gifts £22,200. The pension alone carries £28,000. The allowances are worth knowing because they are certain and immediate, but on estates of this size they change the edges of the bill rather than its size. The larger levers are the ones covered elsewhere: the normal expenditure exemption, which has no cap, gifts that survive 7 years, and who receives the pension. None of this is advice on a particular estate; a solicitor, the personal representatives or a regulated adviser check a real case, and the estate calculator shows how gifts change the totals.