small gift clarification

May I please request clarification on the following sentence in the HMRC guidelines on IHT: "Birthday or Christmas gifts you give from your regular income are exempt from Inheritance Tax." Does this mean that you can give someone birthday and Christmas gifts in addition to an exempt gift of £250 or some other sum from your £3000 exemption, with no IHT implications? And if so, is there a limit to the value of the birthday and Christmas gifts? Thank you in anticipation.

Hi,

There is an annual exemption, that allows an individual to give away a total of £3000 worth of gifts each tax year without them being added to their estate.  

You can give gifts or money up to £3,000 to one person or split the £3,000 between several people.  

You can give as many gifts of up to £250 per person as you want each tax year, as long as you have not used another allowance on the same person. You can see further guidance here:

How Inheritance Tax works: thresholds, rules and allowances

Thank you.
 

Thank you for your response. The guidance stipulates: "Small gift allowance You can give as many gifts of up to £250 per person as you want each tax year, as long as you have not used another allowance on the same person. Birthday or Christmas gifts you give from your regular income are exempt from Inheritance Tax." (i) Does this specific reference to birthday and Christmas gifts mean that such gifts may be given in addition to any gifts given under the the aforementioned £3k/£250 allowances, with no IHT implications? (ii) The reference to birthday and Christmas gifts comes under the "small gift allowance" subheading: does that mean that each birthday/Christmas gift cannot exceed £250, without IHT implications? Thank you in anticipation.

Hi snappy,

Birthday or Christmas gifts you give from your regular income are exempt from Inheritance Tax, so will not affect the £250.00 small gift allowance.  

The guidance here: How Inheritance Tax works: thresholds, rules and allowances

This guidance does not state a maximum amount for a Christmas or Birthday gift, so long as it comes from your regular income, it is exempt from Inheritance Tax.

Thank you. 
 

However, based on the information you provided, if a gift is given from your regular income and it is a [link removed ] Christmas gift, it would be exempt from Inheritance Tax in the UK. The £250 small gift allowance refers to gifts that are not part of your regular income and can be given to any individual per tax year without incurring Inheritance Tax. However, there is no specific maximum amount mentioned for birthday or Christmas gifts given from regular income in the guidance you mentioned. It's always a good idea to consult with a tax professional or refer to the official HM Revenue & Customs (HMRC) guidance for the most up-to-date and accurate information regarding Inheritance Tax exemptions and allowances.