How much money can you gift and receive tax-free in the UK?
Are you looking to give or receive money from a loved one in the UK? You might be wondering how much money you can gift or receive tax-free.
The good news is that you can give a certain amount of money without paying any tax. Let’s explore exactly how much money you can gift and receive tax-free in the UK.
What counts as a gift?
Firstly, let’s understand what a gift is. A gift is considered to be any transfer of money or assets that is made voluntarily, without the expectation to receive anything in return. It can be in the form of cash, property, stocks, or other assets.
How much money can you gift tax-free in the UK?
In the UK, you can give away up to £3,000 per year as gifts without having to pay any tax. This is known as the annual exemption. It means that you can give away up to £3,000 per year to anyone you like, without having to pay any tax on it. You might want to give the whole £3,000 to one person or divide it up between different receivers.
You can also carry forward any unused allowance from the previous year, so if you didn’t use your annual exemption last year, you can give away up to £6,000 this year tax-free. You can only carry forward your allowance for one tax year.
What’s the deal with inheritance tax?
It’s worth noting that if you give away more than your annual exemption, you may have to pay inheritance tax on the gift if you die within seven years of making it. The amount of tax you’ll have to pay depends on the value of the gift and the time passed since you made the gift. This is known as taper relief.
Taper relief only applies to money and assets over the £325,000 tax-free threshold for inheritance tax.
Tax rates for gifts made less than seven years before death are:
- 0 to 3 years – 40%
- 3 to 4 years – 32%
- 4 to 5 years – 24%
- 5 to 6 years – 16%
- 6 to 7 years – 8%
How much money can you gift for Christmas and birthdays tax-free?
If you want to gift money for Christmas or a birthday, don’t worry. You can give money for birthday and Christmas gifts from your regular income without being subject to tax.
There’s also the small gift allowance. This means you can gift up to £250 per person per year, so long as you haven’t used another allowance on that person. So, if you’re looking for Christmas gift ideas, you can give money without paying any tax.
How much money can you gift to a family member tax-free UK?
In addition to the annual exemption, there are other exemptions that you can use to gift money tax-free.
Some family members have different rules. Spouses are exempt from inheritance tax, so you can gift as much as you like to your spouse or civil partner as long as they’re a permanent UK resident.
You can also support family members with regular payments tax-free. You must pay them from your regular income, and they can cover costs like rent, bills, and paying into savings accounts for under 18s.
Can you gift money for weddings tax-free?
Want to gift someone money for a wedding? You might want to help out with the cost of the wedding itself or give a gift to the newlyweds to celebrate their marriage. You can gift some money for a wedding or civil ceremony without having to pay any tax.
How much money can you gift for a wedding tax-free?
- Parents can give up to £5,000 tax-free.
- Grandparents can give up to £2,500 tax-free.
- Anyone else can give up to £1,000 tax-free.
This tax-free allowance for weddings is on top of your normal annual exemption. For example, you could gift your child a total of £8,000 tax-free for their wedding, using the wedding gift tax exemption and your annual exemption.
How much money can you receive as a gift without being taxed UK?
If you’re receiving a gift, you don’t have to pay any tax on it. However, if you receive income from the gift, such as interest on a cash gift, you might have to pay tax on the income. For example, if your friend gives you £10,000 as a gift, and you put it in a savings account that earns interest, you’ll have to pay tax on the interest you earn, but not on the gift itself.
Send money as a gift
Want to send money as a gift to a loved one in a different country? With Western Union, you can send money reliably in the way that’s easiest for you. Choose to make an international money transfer online, in-store at an agent location, or with the Western Union app.
