22 January 2026
general
From helping a loved one get on the property ladder to celebrating a family member’s milestone birthday, there are several reasons you might be looking to gift your wealth in 2026.
According to SunLife, 1 in 5 people over 50 have given substantial cash gifts over the last five years, with 2025 gifts averaging £12,323.
In some cases, gifting your wealth can help mitigate your estate’s Inheritance Tax (IHT) bill. However, depending on when you pass away, the size of your estate, and the value given, some gifts could still be subject to IHT.
Fortunately, there are multiple tax-efficient gifting allowances available to help you make cash gifts without risking a future IHT charge. By taking advantage of these exemptions, you could gift a significant amount over your lifetime, potentially mitigating your estate’s future IHT bill while supporting loved ones.
Read on to discover four gifting allowances available in 2026 and how you can make the most of them before they renew in April.
Some gifts may be included in your estate for Inheritance Tax purposes
In theory, you can gift an unlimited amount of your wealth without it being included in IHT calculations after you pass away.
However, gifts may be subject to IHT when you die if the following are true:
In 2026, the first £325,000 of your estate is typically exempt from IHT. This is known as your nil-rate band. You may also have a residence nil-rate band of £175,000 if you leave a primary residence to a direct descendant, meaning IHT would only be charged when your estate exceeds £500,000.
The portion of your estate exceeding the nil-rate bands is typically charged IHT at 40%.
In some cases, gifts made within seven years of your death may be charged IHT at a tapered rate. However, because gifts typically count towards your nil-rate band before other assets, taper relief is usually only applicable if the total amount gifted exceeds £325,000.
As such, if you’re hoping to mitigate your estate’s IHT bill by gifting your wealth, you could use your annual tax-free gifting allowances.
Using the following four allowances and exemptions, you may be able to make some gifts without risking a future IHT charge, regardless of when you pass away.
1. You can give up to £3,000 a year through your annual exemption
As of 2025/26, and set to remain the case in 2026/27, you can typically gift up to £3,000 without the value being included in your estate for IHT when you pass away.
You can use this annual exemption on one person or distribute the £3,000 among multiple recipients.
The allowance resets on 6 April each year. Provided you use up the current year’s allowance first, you can usually carry forward any unused annual exemption from the previous year.
So, if you haven’t made significant cash gifts in the current or previous tax years, in 2026 you could potentially give the following without risking an IHT charge:
What’s more, the annual exemption is allocated by individual, rather than by household. So, if you’re married or in a civil partnership, you each have your own allowances – effectively doubling the amount you can gift as a couple to £6,000 each tax year.
2. You could give more money for a wedding without risking an Inheritance Tax charge
If a loved one is getting married or starting a civil partnership, you can often give additional cash gifts tax-efficiently through the wedding gift allowance.
The amount you can give depends on your relationship with the recipient:
You can combine your wedding gift allowance with your annual exemption in the same tax year, meaning you could give up to £8,000 to a newlywed child as a lump sum without risking a future IHT charge.
3. Regular gifts out of your income may be exempt from Inheritance Tax
You may be able to make regular gifts of an unlimited value without them being included in your estate for IHT purposes.
The payments must be made out of your normal income after meeting your usual living expenses.
You can combine these “normal expenditure out of income” payments with both the annual exemption and the wedding gift allowance. For example, if you support your child with rent each month, you could still gift up to £8,000 tax-efficiently as described above.
What’s more, provided they are made from your regular income, birthday and Christmas gifts are typically exempt from IHT.
4. An unlimited number of small gifts are exempt from Inheritance Tax
Each tax year, you can give an unlimited number of gifts up to the value of £250 without the value being included in your estate when you pass away.
This small gift allowance cannot be combined with any other allowance.
Gifting in your lifetime could be rewarding in more ways than one
Making cash gifts in your lifetime, rather than waiting to leave your wealth to beneficiaries after you die, could help your loved ones get more benefit out of your hard-earned money.
As discussed, IHT is typically charged at a rate of 40% for assets over the nil-rate bands. By using your annual exemptions and making any larger gifts early to reduce the risk of the value being taxed under the seven-year rule, you could help ensure more of your wealth ends up in the hands of your loved ones – rather than HMRC.
What’s more, the sooner you gift, the earlier your loved ones can put it to use. Whether they’re planning to buy a new home, start a business, or put it towards a wedding, gifting early can help your loved ones achieve their goals sooner.
Get in touch
If you’re looking to make tax-efficient gifts or create a comprehensive estate plan to mitigate IHT, email enquiries@jesellars.co.uk or call 01934 875 919 to find out more about how we can help you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning or tax planning.
Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.
Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.
