You can gift money tax free in the UK through set exemptions each tax year, chiefly a £3,000 annual exemption, plus larger gifts that become fully tax free if you live for seven years after making them. There is no separate gift tax in England and Wales, and the person receiving a cash gift pays no income tax on it.
The only tax that can reach back to a gift is inheritance tax, and only if the giver dies within seven years and the gift was not already exempt. Two exemptions are effectively unlimited: gifts between spouses or civil partners within the UK tax net, and gifts to registered charities (leaving 10% or more of your net estate to charity also cuts the rate on the rest from 40% to 36%). The rest of this guide covers the everyday allowances, then the seven-year rule (gov.uk, as at August 2026, subject to change).
How much can you gift tax free each year?
You can gift £3,000 in total each tax year under the annual exemption, and carry forward one unused year to give up to £6,000. Separately, you can give as many gifts of up to £250 per person as you like, provided you have not used another exemption on that same person.
The annual exemption runs across the tax year (6 April to 5 April) and can go to one person or be split, with any unused amount carried forward one year only. The £250 small gifts exemption is separate, but cannot go to someone who has already had part of your annual exemption.
| Allowance | Limit | Key condition |
|---|---|---|
| Annual exemption | £3,000 per tax year | One person or split; carry one unused year forward (up to £6,000) |
| Small gifts | £250 per person | Any number of people; not the same person as another exemption |
Source: gov.uk, as at August 2026, subject to change.
Can you give tax-free wedding gifts?
Yes. For a wedding or civil partnership you can give, free of inheritance tax and on top of your annual exemption, up to £5,000 to your child, up to £2,500 to a grandchild or great-grandchild, and up to £1,000 to anyone else. The gift must be made on or shortly before the day, and the ceremony must go ahead.
| Your relationship to the couple | Tax-free wedding gift |
|---|---|
| Parent (gift to your child) | Up to £5,000 |
| Grandparent or great-grandparent | Up to £2,500 |
| Anyone else | Up to £1,000 |
Source: gov.uk, as at August 2026, subject to change.
Can you give unlimited gifts from your income?
Yes, in principle. Regular gifts made from your surplus income are exempt from inheritance tax with no upper limit, provided they come out of income rather than capital, form a normal pattern of giving, and leave you enough to maintain your usual standard of living.
This "normal expenditure out of income" exemption is the most powerful and the most overlooked. There is no set cap: regular payments into a grandchild's savings, monthly help with a child's rent, or school fees can all qualify. It is claimed by your executor after death, so keep a simple written record. Three tests must be met:
- The gifts form a pattern. They must be habitual, or intended to be regular, rather than a one-off transfer.
- They come from income, not savings. The money must be paid out of your income and not by drawing down capital.
- Your lifestyle is unaffected. After making the gifts you must be able to keep up your normal standard of living.
Can you stack gift allowances in the same year?
Yes. Most exemptions combine, so one person can receive several tax-free gifts from you in a single tax year. The one that does not stack is the £250 small gifts allowance, which cannot be used on someone who has already received part of your annual, wedding or other exemption.
This is where the real planning sits, and where most guides stop short. The table shows which allowances layer together for one recipient.
| Allowance | Combines with others? |
|---|---|
| Annual exemption (£3,000, plus one year carried forward) | Yes |
| Wedding gift (£5,000 / £2,500 / £1,000) | Yes |
| Gifts from surplus income | Yes |
| Small gifts (£250) | No, not on the same person as another exemption |
Worked example: a parent at a child's wedding
Your daughter is getting married, and you did not use your annual exemption last year. In this one tax year you could give her, all free of inheritance tax straight away:
- £5,000 as a wedding gift
- £3,000 as this year's annual exemption
- £3,000 as last year's unused annual exemption, carried forward
Total: £11,000 tax free, immediately.
You could not add a £250 small gift for her in the same year, as other exemptions are already used on her. Anything above these allowances is a potentially exempt transfer, covered by the seven-year rule below.
What is the 7-year rule, and how does taper relief work?
Larger gifts to an individual, above your yearly exemptions, become completely free of inheritance tax if you live seven years after making them. If you die within seven years, the gift counts towards your £325,000 nil-rate band first. Taper relief then reduces the tax, not the gift, and only on the part of your gifts above that band.
There is no limit on what you can give away outright, and no tax is due at the time. Gifts made in the seven years before death are set against the nil-rate band first, in the order they were made. The nil-rate band is £325,000 per person and is frozen until 5 April 2031, extended at Budget 2025 on 26 November 2025 (gov.uk, as at August 2026, subject to change). Only where gifts in that period exceed the available band does tax fall due on the gifts themselves. Taper relief then applies, and this is where guides go wrong: it only touches the slice of gifts above £325,000, and it reduces the tax rate on that excess, not the sum the band already covers.
| Years between gift and death | Tax rate on the taxable excess |
|---|---|
| Less than 3 years | 40% |
| 3 to 4 years | 32% |
| 4 to 5 years | 24% |
| 5 to 6 years | 16% |
| 6 to 7 years | 8% |
| 7 years or more | 0% (fully exempt) |
Source: gov.uk, as at August 2026, subject to change.
What people get wrong: two cases side by side
Case A. You gift £200,000 to your son and die five years later, with no other gifts. Many expect taper relief to cut a bill. There is no bill: the £200,000 sits inside the £325,000 nil-rate band, so no tax is due and taper relief is irrelevant.
Case B. You gift £400,000 and die five years later, no exemptions used. The first £325,000 is covered by the band. The remaining £75,000 is taxable at the 5-to-6-year rate of 16%: tax of £12,000, not £30,000 at the full 40%. Taper relief helped only on the £75,000 above the band.
For the everyday gifts most families make, surviving seven years and using the yearly exemptions does the real work. Our guide on gifting money to children works through more scenarios, and see estate planning for the wider picture.
Frequently asked questions
How much money can you gift tax free in the UK?
You can gift £3,000 in total each tax year (or £6,000 with one carried-forward year), plus £250 to any number of other people, plus wedding gifts of up to £5,000 to a child. Regular gifts from surplus income are exempt with no limit, and larger one-off gifts are tax free if you live seven years after making them (gov.uk, as at August 2026, subject to change).
Can I gift £100,000 to my son?
Yes. There is no limit on what you can give, and no tax is due at the time. A £100,000 gift above your yearly exemptions is a potentially exempt transfer, free of inheritance tax if you live seven years afterwards. If you die within seven years, it counts towards your £325,000 nil-rate band first (gov.uk, as at August 2026, subject to change).
Do I have to declare a cash gift to HMRC?
No, not when the gift is made, and the person receiving it does not declare it either. Gifts made in the seven years before death are declared by your executor when inheritance tax is worked out, so a dated record of gifts and the exemption used makes that far easier.
Can I gift money to reduce future care fees?
Giving money away mainly to lower a future care bill can backfire. A local authority can treat it as deliberate deprivation of assets and assess you as if you still owned it, with no fixed look-back period in England. Gifting can form part of planning for the impact of care fees, but timing and motive matter (see care home fees).