HMRC £3,000 Gift Allowance 2026: How to Give Tax-Free & What Counts
HMRC permits each person to give away up to £3,000 per tax year free of inheritance tax. This annual exemption can go to one recipient or be split. Unused amounts carry forward for one year only. Additional exemptions include £250 per person for small gifts.
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HMRC permits each person to give away up to £3,000 per tax year free of inheritance tax. This annual exemption can go to one recipient or be split. Unused amounts carry forward for one year only. Additional exemptions include £250 per person for small gifts.
By Chandraketu Tripathi · Updated April 2026 · Fact-checked
Tax · April 2026
HMRC allows you to make certain gifts completely free of inheritance tax (IHT) during your lifetime. The most widely used is the annual exemption of £3,000 per person per tax year - giving every UK adult the ability to reduce their estate and pass wealth to family while alive, completely free of IHT. Here is a complete guide to all the gifting exemptions available in 2026.
Gift exemption
Amount
IHT-free immediately?
Notes
Annual exemption
£3,000/year
Yes
Carry forward 1 unused year
Small gifts
£250/person/year
Yes
Cannot combine with annual exemption for same person
Wedding - child
£5,000
Yes
Must be given on/before wedding day
Wedding - grandchild
£2,500
Yes
Must be given on/before wedding day
Wedding - anyone else
£1,000
Yes
Must be given on/before wedding day
Regular gifts from income
Unlimited
Yes
Must be from surplus income, not capital
Gifts to charity
Unlimited
Yes
Always exempt - no limit
Gifts to spouse/civil partner
Unlimited
Yes
Always exempt (recipient lives in the UK permanently)
The £3,000 Annual Exemption - Key Rules
Each person can give away up to £3,000 per tax year completely free of inheritance tax. This can be given to one person or split between several people in any way you choose. If you do not use your full allowance in one tax year, the unused amount carries forward to the next year - but only for one year. A couple who have not used their exemptions for one year can each give away £6,000 tax-free, for a combined household gift of £12,000.
The annual exemption runs from 6 April to 5 April each year. The 2026/27 tax year started on 6 April 2026 - making now a good time to use this year's £3,000 allowance and, if applicable, carry forward last year's unused amount.
Regular Gifts from Surplus Income - The Powerful Exemption
One of the most valuable but overlooked IHT exemptions applies to regular gifts made from surplus income. If you can demonstrate that gifts are: made regularly (as part of a consistent pattern), funded from income rather than capital, and leave you with sufficient income to maintain your normal standard of living - they are immediately exempt from IHT with no upper limit and no seven-year rule.
For a retiree with a generous pension paying £30,000/year who only needs £20,000 to live comfortably, gifting £10,000 per year to children from income surplus - if done regularly and documented - is immediately outside the estate. Over 10 years this removes £100,000 from the estate completely tax-free.
💡 Keep records of every gift you make - date, amount, recipient and whether it was from income or capital. When you die, your executors will need to complete an IHT return covering gifts made in the last 7 years. Good records make this straightforward and ensure exemptions are properly claimed. HMRC does not need to be notified of gifts during your lifetime - only at the time of death.
⭐ OUR VERDICT
The annual £3,000 gift exemption should be used every year by anyone with an estate above the IHT threshold. It costs nothing, requires no professional advice and immediately reduces your IHT exposure. Combine it with regular gifts from surplus income (immediately exempt, no limit), wedding gift allowances when family members marry, and the seven-year rule for larger gifts to build a comprehensive IHT gifting strategy. Seek regulated advice for estates above £500,000 where the pension IHT changes from April 2027 also need to be factored in.
Frequently Asked Questions
How much can I give tax-free to family in 2026?
You can give up to £3,000 per tax year completely free of inheritance tax using the annual exemption. In addition, you can give £250 to as many individuals as you like (small gift exemption), and make regular gifts from surplus income with no upper limit. Larger gifts above these exemptions may be subject to IHT if you die within 7 years.
Can I carry forward my gift allowance?
Yes - if you do not use your full £3,000 annual exemption in one tax year, the unused amount carries forward to the next year but only for one year. You cannot accumulate unused exemptions for more than one year. Couples can each carry forward their own unused allowance independently.
Do I need to tell HMRC about gifts I make?
No - you do not need to notify HMRC about gifts during your lifetime. However, your executors must declare gifts made in the 7 years before your death on the IHT return submitted after you die. Keeping records of all gifts (dates, amounts, recipients) makes this process straightforward.
Does giving money to my child count as income for them?
No. Gifts are not income for the recipient and do not need to be declared by them on a tax return. There are no income tax implications for receiving a cash gift, regardless of the amount. However, any investment returns generated by a gift from a parent to a child under 18 are taxed as the parent's income if they exceed £100 per year.
Checked against primary sources on 23 September 2026
How much can I gift each year without paying inheritance tax?
Each person can give away £3,000 each tax year, which runs from 6 April to 5 April, free of inheritance tax. This is called the annual exemption. The annual exemption has been £3,000 since 1981. A couple each have their own annual exemption, so £6,000 a year between them.
Can I carry forward an unused gift allowance?
Yes. An unused annual exemption can be carried forward one tax year only, allowing up to £6,000 in one year. A couple each have their own annual exemption, so £6,000 a year between them, or £12,000 if both carry forward a year.
Can I use the 250 pound small gift and the 3,000 pound allowance for the same person?
No. Small gifts of up to £250 per person per tax year are exempt, but not to someone who has also received gifts under the annual exemption in the same tax year. The annual exemption allows £3,000 each tax year, from 6 April to 5 April, free of inheritance tax.
How much can I give for a wedding tax free?
Wedding or civil partnership gifts are exempt up to £5,000 to a child, £2,500 to a grandchild or great-grandchild and £1,000 to anyone else. These amounts are free of inheritance tax. Each person can also give away £3,000 each tax year under the annual exemption.
What happens if I die within seven years of a gift?
Gifts above the exemptions become potentially exempt transfers. They are free of inheritance tax if the giver lives 7 years. Tax on gifts made 3 to 7 years before death is reduced on a sliding scale, known as taper relief.
Update, 14 October 2026: worked example of combining gift exemptions in 2026/27
A parent who used none of the £3,000 annual exemption in 2025/26 can give £6,000 in 2026/27 free of inheritance tax, because unused annual exemption carries forward for one tax year only, according to gov.uk. If that parent's child marries in 2026/27, a £5,000 wedding gift can be added to the £6,000, giving £11,000 to that child free of inheritance tax, since the wedding allowance combines with any other allowance except the small gift allowance, gov.uk states.
The same parent can also give gifts of up to £250 each to any number of other people in the same tax year, but not to the child who received the annual exemption or wedding gift, per gov.uk. Gifts above the exemptions are taxed only if the giver dies within 7 years and gifts exceed the £325,000 threshold; tax on the excess falls from 40 percent to 32, 24, 16 and 8 percent for gifts made 3 to 4, 4 to 5, 5 to 6 and 6 to 7 years before death. Gifts between spouses or civil partners carry no inheritance tax where the couple are legally married or in a civil partnership and the recipient lives in the UK permanently.
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Chandraketu Tripathi
Finance Editor · Kaeltripton.com
Lead editor of Kael Tripton. LBS MBA (Sloan Fellow), AI/ML postgraduate (IIIT Bangalore). 22 years in marketing and commercial roles across 23 markets. Covers UK money, tax and visas.
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