Do you pay Inheritance Tax on gifts?

For people thinking about giving money or property away during their lifetime, and families sorting out an estate.

Applies to: England, Scotland, Wales, Northern Ireland Last checked against official sources: 6 October 2026

Gifts can count towards Inheritance Tax if you die within 7 years of giving them, but many gifts are tax free.

You can give away £3,000 a year tax free, and carry unused allowance forward for one year.
Gifts to your spouse or civil partner, charities and political parties are exempt.
You can give up to £250 a year to any number of people, if no other allowance covers that person.
Regular gifts from your normal income can be tax free.
If you live 7 years after a gift, no tax is due on it, unless it is part of a trust.

Key facts

£3,000 a year annual exemption
£250 small gifts per person
7 year rule
Taper relief: 32% down to 8%

What counts as a gift

For Inheritance Tax, a gift is anything of value you give away. This includes:

money
household and personal goods, such as furniture, jewellery or antiques
a house, land or buildings
shares listed on the London Stock Exchange
unlisted shares you held for less than 2 years before your death

If you sell something for less than it is worth, the difference counts as a gift. For example, selling a house worth £300,000 to your son for £200,000 is a £100,000 gift.

Gifts that are always tax free

Spouse or civil partner: no Inheritance Tax, as long as they live in the UK permanently.
Charities and political parties: no limit.

Yearly allowances

Allowance	How much	Key rule
Annual exemption	£3,000 a year	Unused amount can be carried forward one tax year only
Small gifts	Up to £250 per person a year	Cannot use another allowance on the same person
Wedding or civil partnership	£5,000 to a child, £2,500 to a grandchild or great-grandchild, £1,000 to anyone else	Given for the wedding or civil partnership
Gifts from income	No set limit	Must be regular, from your normal income, and leave you enough to live on

The annual exemption can cover one big gift or several small ones. If you used none of it last tax year, you could give £6,000 this year without it counting.

Gifts from income could include paying rent for your child, paying into a savings account for a child under 18, or supporting an elderly relative.

The 7 year rule

No tax is due on gifts if you live for 7 years after giving them, unless the gift is part of a trust. Gifts made in the 7 years before death may be taxed.

Any tax on gifts is usually paid by the estate. But once you have given away more than £325,000 in the 7 years before death, anyone who got a gift in those 7 years may have to pay tax on it.

Taper relief

Taper relief lowers the tax on gifts made 3 to 7 years before death. It only applies if the total of gifts in those 7 years is over the £325,000 tax-free threshold.

Gift made before death	Tax rate on the gift
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 or more years	0%

Gifts where you keep a benefit

If you give something away but still benefit from it, it still counts as part of your estate. An example is giving your home to a relative but carrying on living there.

Keep records

Write down what you gave, who you gave it to, what it was worth and when you gave it.

Scotland, Wales and Northern Ireland

Inheritance Tax is a UK-wide tax. The same gift rules apply in every UK nation.

Related guides

Where this comes from

Get it done

This takes you to the official service, which is free to use.

Read the gift rules on GOV.UK

Common questions

How much can I give for a wedding tax free?

£5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to anyone else.

Who pays Inheritance Tax on a gift?

Usually the estate. But if you gave away more than £325,000 in the 7 years before death, people who got gifts may have to pay tax on them.

What is the Inheritance Tax rate?

The standard rate is 40% on the part of an estate above the threshold.

Official sources

1.Inheritance Tax: rules on giving gifts (GOV.UK)www.gov.uk/inheritance-tax/gifts
2.Inheritance Tax (GOV.UK)www.gov.uk/inheritance-tax

Checked against GOV.UK on 6 October 2026

Ask about your situation

Please don't include your name, address, National Insurance number or health details. See our privacy notice.