Can you gift money to family tax-free in the UK?Yes — you can give money to family members tax-free up to certain limits. Gifts above these limits may be subject to inheritance tax (IHT) if you die within 7 years of making them. There is no gift tax in the UK, but IHT rules mean large gifts are not automatically tax-free if you die soon after making them. There is no gift tax in the UK. Large gifts become potentially exempt from IHT if you survive 7 years after making them. Annual allowances let you give up to £3,000 per year completely free of IHT. IHT annual gift allowances
The 7-year rule for larger giftsAny gift above your available allowances is a Potentially Exempt Transfer (PET). If you survive 7 years from the date of the gift, it falls outside your estate and no IHT is due. If you die within 7 years, the gift may be subject to IHT — but taper relief reduces the rate payable on gifts made 3 to 7 years before death.
Gifting to children: income tax considerationsIf you give money to your own minor child (under 18) and the gift generates more than £100 of income per year, that income is taxed as yours — not the child. This prevents parents sheltering income in a child name. The £100 rule does not apply to gifts from grandparents or other family members. Can you gift a property to family?Yes, but gifting property triggers Capital Gains Tax (CGT) on any gain above your annual CGT allowance (£3,000 in 2025/26) — calculated as if you sold at market value, even if no money changed hands. IHT 7-year rules also apply. Professional advice is strongly recommended before gifting property. Gifting money to fund a house depositGifted deposits for property purchases are accepted by most mortgage lenders. The donor must sign a gift letter confirming the money is a gift (not a loan) and that they have no interest in the property. The gift counts toward the 7-year IHT clock if it exceeds your available allowances. Verdict Generous allowances — but keep records The UK gifting rules are relatively generous for regular family giving. Use your £3,000 annual exemption every year, make use of small gifts, and keep a written record of larger gifts and when they were made. For substantial transfers, take advice to structure them efficiently. Frequently asked questionsHow much can I gift to my child tax-free? You can give your child up to £3,000 per year under the annual exemption, plus £250 per year under the small gifts exemption (if not combining with the annual exemption for the same person). Larger gifts are potentially exempt from IHT if you survive 7 years. Does gifting money affect benefits? Gifting money when you claim means-tested benefits (Universal Credit, Pension Credit) may be treated as deprivation of assets — meaning the DWP treats you as still having the money for benefit calculation purposes. Take advice before gifting if you receive means-tested benefits. Can I carry forward my gift allowance? Yes — but only by one year. If you did not use your £3,000 annual exemption last tax year, you can use £6,000 this year. You cannot carry forward more than one year of unused allowance. Do I need to tell HMRC about gifts? You do not need to report gifts to HMRC during your lifetime. However, your executor must declare gifts made in the 7 years before death on the IHT return (IHT403). Keep a record of significant gifts including the date, amount, and recipient. |
Gifting Money to Family UK: Tax Rules Explained 2026
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