For many people, one of the greatest pleasures of having money is being able to give it away to children, grandchildren, loved ones, or causes that matter deeply to you.
But there’s a question that stops a lot of generous intentions in their tracks:
“If I gift this money, will I get hit with a big tax bill?”
With the right strategy, you can give generously while keeping the taxman at arm’s length.
You can also gift as much as you wish, with no immediate tax charge (on the proviso it is not more than £325,000 into discretionary trust).
Why This Matters
Gifting isn’t just about reducing tax. It’s about seeing the difference your money makes while you’re still here to enjoy it. Whether it’s helping your children onto the property ladder, paying for a grandchild’s education, or supporting a charity, giving now can be one of the most satisfying financial decisions you’ll ever make.
The challenge is doing it in a way that doesn’t create unintended inheritance tax (IHT) problems down the line.
In the UK, there are several ways to gift without triggering an immediate tax bill and without adding to your estate’s eventual IHT liability.
1. The Annual Exemption
Every tax year, you can give away up to £3,000 in total without it being counted towards IHT.
If you didn’t use last year’s allowance, you can carry it forward, so potentially £6,000 in one year, and this is doubled if married.
2. Small Gift Allowance
You can also make unlimited gifts of up to £250 per person, per tax year as long as you haven’t used another allowance on the same person.
3. Gifts From Income
One of the most powerful and often overlooked exemptions is gifting from excess income.
If your regular income is more than enough to cover your living costs, you can gift the surplus away immediately free from IHT.
The key here is keeping records to prove the gifts came from income and that they didn’t affect your normal standard of living.
4. Potentially Exempt Transfers (PETs)
You can gift any amount as a PET and if you live for seven years after making the gift, it’s fully outside your estate for IHT purposes.
If you die within seven years, some or all of the gift could be taxed, though taper relief may reduce the bill after three years.
Without a clear plan, gifting can create problems:
• Giving away too much and leaving yourself short later in life
• Accidentally triggering IHT because of poor timing or record-keeping
• Missing exemptions and paying more tax than necessary
This is where a financial planner steps in — not to stop you from being generous, but to make your generosity work harder.
When a client comes to us with gifting in mind, we:
1. Review your full financial picture to make sure gifting won’t impact your own security.
2. Use cashflow modelling to show the long-term effects of different gift amounts.
3. Identify the best combination of allowances and exemptions to minimise tax.
4. Keep clear, compliant records to satisfy HMRC if ever asked.
The result? You get to enjoy giving without fear of leaving your loved ones with a surprise tax bill.
Gifting Isn’t Just About Tax
The real joy of gifting is emotional. It’s seeing the smile when a dream becomes possible. It’s knowing you’ve made a lasting difference. Tax efficiency is simply the tool that lets you do more of it.
Your Next Step
If you want to gift money without creating tax headaches — and without putting your own future at risk — we can show you exactly how to do it.
Book your free initial call with Strive — and let’s make your generosity go further.
Inheritance Tax planning is not regulated by the Financial Conduct Authority
