What exemptions apply to lifetime gifts? Private Wealth

There are additional exemptions available for lifetime gifts:

Normal expenditure out of income

Lifetime gifts are exempt if they form part of your normal expenditure out of (after tax) income, provided that you are left with sufficient income to maintain your usual standard of living (and do not need to dip into capital).  A regular pattern of giving is required, for example meeting annual school fees for a grandchild, or paying the premiums on a life policy for another’s benefit.

Small gifts

Any number of gifts of up to £250 (to any one individual) during a tax year are exempt. The exemption is only available if the gifts to that individual for the tax year do not exceed £250 in total. For example, if you were to give your niece £200 and your granddaughter £300 during the tax year 2008/2009, only the gift to your niece would be exempt.

Wedding or civil partnership gifts

Lifetime gifts on the occasion of a marriage or civil partnership are exempt up to certain limits. The limits are as follows:

  • Each parent can give £5,000.
  • Each grandparent or great-grandparent can give £2,500.
  • Either of the couple can give to each other £2,500.
  • Any other person can give £1,000.

The gift must take place before the ceremony and must be conditional upon the ceremony taking place. The exemption is not available if the ceremony does not take place.

Annual exemption

Lifetime gifts (which do not fall into any other exemption) are exempt up to £3,000 a year. If the annual exemption is (wholly or partly) unused for a particular tax year, the unused portion may be carried forward for one tax year only.