Gifts in anticipation of marriage

There is a special exemption from Inheritance Tax for cash gifts made on or shortly before the date that the relevant wedding or civil partnership ceremony takes place.

The amount of tax relief varies depending on the relationship between the donor and the recipient.

  • Each parent (including step-parents) can gift up to £5,000 tax free
  • Grandparents and Great grandparents can each gift up to £2,500
  • Any other person can each gift up to £1,000

If the value transferred by the gift is more than the amount of the available exemption, it is an exempt transfer up to the amount of the available exemption, and the excess is chargeable.

There is also a separate, general annual exemption of £3,000 for gifts. This exemption can be carried forward if not used to make a maximum gift of £6,000. These gifts are ignored in the event of the donor’s demise within 7 years of making the gift.

There are also exemptions for normal gifts out of income such as making birthday gifts. A donor can also give as many gifts of up to £250 per person as they want during the tax year but only if they haven’t used another exemption on the same person.

Newly married couples should be advised that there is no IHT to pay on lifetime gifts between spouses or civil partners as long as they live together in the UK.