How much a family can give tax-free
£35,000. That is what one family hands over for a single wedding in the worked example later in this guide, and every pound of it leaves their estates for inheritance tax purposes on the day it is given: no seven year clock, no reporting, no paperwork beyond a note in a drawer. The figure is built from three exemptions that apply immediately. The wedding and civil partnership exemption allows £5,000 from a parent, £2,500 from a grandparent or great-grandparent, and £1,000 from anyone else. The £3,000 annual exemption stacks on top of it for the same recipient. And the £250 small gifts exemption covers an unlimited number of other people, provided it is never mixed with anything else. The small print does catch people, though: the wedding gift must come before the ceremony, and the £250 exemption silently disappears if you try to combine it with another allowance.
This guide sets out each exemption as confirmed on GOV.UK's guidance on gifts and inheritance tax, explains exactly how they combine, and works through the full family example. Everything here is general information rather than legal or financial advice, and since inheritance tax operates on the same footing across all four UK nations, the figures hold wherever in the UK you live. For decisions involving significant sums, speak to a specialist first.
The wedding and civil partnership gift exemption
A gift made "in consideration of" a marriage or civil partnership is exempt from inheritance tax up to a limit that depends on your relationship to the couple:
| Who is giving | Exempt limit per giver |
|---|---|
| Parent of the bride, groom or civil partner | £5,000 |
| Grandparent, great-grandparent or remoter ancestor | £2,500 |
| One party of the couple to the other | £2,500 |
| Anyone else (siblings, aunts, uncles, friends) | £1,000 |
Three points in that table are easy to miss. The limits are per giver, not per couple: two parents can give £5,000 each, and all four grandparents can give £2,500 each, to the same wedding. The £2,500 tier also covers a gift from one member of the couple to the other before the ceremony (afterwards, gifts between spouses and civil partners are wholly exempt anyway under the spouse exemption). And the exemption applies per marriage or civil partnership, so it is available again if a child remarries later in life.
Civil partnerships are treated identically to marriages throughout. For blended families a practical caution: HMRC's manual at IHTM14191 frames the £5,000 tier around being "a parent of one party", so where step-relationships are involved it is worth confirming which tier applies before assuming the higher figure; our blended families hub covers the wider estate issues for step-families.
The timing trap: the gift must come before the wedding
This is the rule most often broken in practice. Per IHTM14191, the gift must be made on or shortly before the marriage or registration of the civil partnership, and must become fully effective when the ceremony takes place, in other words it is conditional on the wedding actually happening. A cheque written six months after the honeymoon is not a wedding gift for inheritance tax purposes, however it is described on the card. Neither is a first-anniversary present. And if the engagement is broken off but the money is kept, the exemption fails and the gift falls back into the ordinary lifetime gift rules. If the wedding fund will be handed over late, it is usually better to rely on the annual exemption instead, or accept that the excess is a potentially exempt transfer.
The £3,000 annual exemption, and how it stacks
Separately from any wedding, every individual can give away £3,000 per tax year free of inheritance tax, split between as many recipients as they like or given to one person. If you did not use last year's annual exemption, it carries forward for one tax year only, so a giver who made no exempt gifts last year can give £6,000 this year. The current year's exemption is used before the carried-forward amount, which matters: if you give only £3,000 this year, this year's exemption covers it and last year's unused £3,000 expires.
The stacking rule is the generous one, and GOV.UK states it in terms: "you can give your child a wedding gift of £5,000 as well as £3,000 using your annual exemption in the same tax year". So for a single parent with a full carried-forward exemption, the tax-free ceiling for a marrying child in one year is:
- £5,000 wedding gift exemption
- £3,000 current-year annual exemption
- £3,000 carried-forward annual exemption
- £11,000 in total, exempt on day one
The £250 small gifts exemption: unlimited people, strict rules
The small gifts exemption covers gifts of up to £250 per person, per tax year, with no limit on how many different people you use it for. Birthday money to five grandchildren, Christmas presents to a dozen relatives, a christening gift to a godchild: all can fall within it. But two rules make it the most misunderstood exemption of the three.
Rule one: it never combines with another exemption for the same person. GOV.UK is blunt about this: the £250 allowance is available "as long as you have not used another allowance on the same person". You cannot give your daughter £3,000 under the annual exemption and then a £250 birthday present under the small gifts exemption in the same tax year. Nor can you top up a £5,000 wedding gift with £250. The small gifts exemption is for people who have received nothing else exempt from you that year.
Rule two: it is all or nothing. HMRC's manual at IHTM14180 confirms that if gifts to any one person in the same tax year exceed £250 in total, the exemption is "wholly lost in relation to that donee". Give someone £300 and the exemption does not shelter the first £250; the whole £300 falls outside it (though the annual exemption, if unused, can pick it up instead). The practical pattern most families settle into is simple: annual and wedding exemptions for children and grandchildren, £250 small gifts for the wider circle.
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Worked example: how much can one family give for a wedding, tax free?
Amara is getting married in September. Her family want to contribute as much as they can without any inheritance tax exposure. None of them has made other exempt gifts to her this tax year; her mother also made no gifts at all last year, so she has a carried-forward annual exemption. Every payment is made before the wedding and is conditional on it going ahead.
| Giver | Wedding exemption | Annual exemption | Carried forward | Total exempt |
|---|---|---|---|---|
| Mother | £5,000 | £3,000 | £3,000 | £11,000 |
| Father | £5,000 | £3,000 | Used last year | £8,000 |
| Grandmother | £2,500 | £3,000 | Used last year | £5,500 |
| Grandfather | £2,500 | £3,000 | Used last year | £5,500 |
| Uncle | £1,000 | £3,000 | Used last year | £4,000 |
| Family friend | £1,000 | Kept for own children | n/a | £1,000 |
| Total | £17,000 | £15,000 | £3,000 | £35,000 |
£35,000 changes hands and every pound of it is exempt immediately. None of it depends on anyone surviving seven years, none of it uses up anybody's £325,000 nil-rate band, and none of it needs reporting to HMRC during lifetime. Meanwhile the couple's other wedding guests can each give up to £1,000 under the wedding exemption (or £250 under the small gifts exemption instead, never both), and Amara's fiancé's family have exactly the same set of allowances on their side.
Two deliberate choices in the table are worth noticing. The uncle used his £1,000 wedding tier plus his £3,000 annual exemption, not the £250 small gift, because the small gift cannot be added to anything. And the family friend gave £1,000 under the wedding exemption rather than £250, because the wedding exemption is simply bigger; the £250 route only wins for someone who wants to preserve their annual exemption and has no wedding tier left.
What happens above the limits
Exceeding an exemption is not a tax bill, and this is where many readers worry unnecessarily. Suppose Amara's mother gives £25,000 rather than £11,000. The first £11,000 is exempt as before. The remaining £14,000 becomes a potentially exempt transfer (a PET): no tax now, and no tax ever if she survives seven years from the gift. If she dies within seven years, the £14,000 is brought back into the reckoning against her £325,000 nil-rate band, and where cumulative gifts exceed that band, taper relief can reduce the tax on gifts made more than three years before death. Our guides to what counts as a gift and the UK inheritance tax threshold cover that fallback machinery in detail.
One further exemption deserves a mention for families making regular contributions rather than one-off wedding gifts: normal expenditure out of income. Regular gifts made from surplus income, which leave the giver able to maintain their normal standard of living, are exempt without any fixed cash limit. It needs pattern and evidence (bank statements, a simple letter of intent), and it sits entirely outside the £3,000 and £250 limits discussed here.
Keep records: your executors will need them
These exemptions are claimed after death, not during life. When the giver eventually dies, their executors must reconstruct seven years of gifting to complete the inheritance tax account, identifying which gifts were covered by which exemption in which tax year. A simple running note (date, recipient, amount, exemption used, and for wedding gifts the wedding date) turns that job from guesswork into a ten minute exercise, and protects the exemptions from being lost for want of evidence. Our executors hub explains what has to be reported and when.
Where this fits in your wider planning
The wedding, annual and small gift exemptions are the low-hanging fruit of inheritance tax planning: immediate, certain and free. But they only matter if your estate is likely to face inheritance tax at all. With the nil-rate band frozen at £325,000 until 5 April 2031 and the residence nil-rate band adding up to £175,000 where a home passes to direct descendants, the first step is to check where you stand. Run your figures through our IHT threshold calculator, then read the inheritance tax pillar guide for the full picture of allowances, reliefs and rates.
If there is a wedding on the horizon in your family, the time to get the tiers and the stacking right is before the day, not after: which relative gives under which exemption, whose carried-forward allowance is still available, and which gifts must land before the ceremony to qualify. Sorted in advance, the same money goes further and none of it hangs on the seven year rule. We can put you in touch with an estate planning specialist who can map the family's gifts against the exemptions and confirm whether they alone will do the job, or whether more structured planning is worth considering.