Lifetime Gifts & Inheritance Tax
You can also minimise the Inheritance Tax your estate may be liable to pay on your death by making lifetime gifts, if you have the resources to do so:
Annual exemption: you can give away up to £3,000 each year free of Inheritance Tax
Small Gifts: cash gifts of up to £250 each to any individuals are tax free
Gifts in consideration of marriage or civil partnership: parents can give a child £5,000 as a wedding gift (or on a civil partnership); grandparents can give £2,500 to qualify for this exemption; and £1,000 in other cases
Normal expenditure out of income: for instance, life insurance premiums and gifts at Christmas or on birthdays
The above also applies to civil partnerships.
Potential exempt transfers: cash gifts to individuals such as family members are tax free if made more than seven years before the date of death. If a cash gift was given within seven years, some Inheritance tax will be payable, but the amount decreases the longer the time period between the gift and the date of death.