Can I gift £3,000 for previous years without paying inheritance tax?

12 March 2019


You say that the personal £3,000 annual inheritance tax (IHT) exemption for gifts doubles if the previous year’s allowance has not been used.  But how far back can this go? If I haven’t used this allowance for 15 years, can I dispose of £45,000 without attracting tax?



Every year, we can all gift up to £3,000 in cash or assets without attracting inheritance tax (IHT). This is known as your ‘gift allowance’. You can carry over any unused allowance from one tax year to the next up to a maximum of £6,000, so you cannot carry it over for 15 years.

However, it is important to remember that there are other amounts you can give away each year which don’t count towards your ‘gift allowance’. These include wedding gifts and smaller sums. With the former, a parent can gift up to £5,000 to a child in the year they get married without it attracting IHT, a grandparent can gift up to £2,500, anyone else can gift a bride or groom up to £1,000 and it is IHT-free. We are all also allowed to give away as up to £250 to as many people as we like each year and it is IHT free.

Just be aware that someone who receives a smaller gift can’t also receive part of your £3,000 ‘gift allowance’.

You can also give money to help pay the living costs of an ex-spouse, elderly dependant or child in full-time education without it attracting IHT.

Finally, you can give money out of your surplus income – provided it won’t affect your usual standard of living and it is a regular gift such as an insurance premium, annual gift or paying school fees – and it is free from IHT. But there are a lot of rules around this particular exemption, so you may want to get professional advice before gifting from your surplus income.

If you do make any gifts, keep a detailed record of them.

IHT is a complicated beast so if you have a large estate and fear a hefty tax bill, it is well worth getting professional advice on how to manage your gifts and minimise any prospective IHT bill.

It is worth noting that only 3.8% of estates were liable for IHT in the 2017/18 tax year, according to the Office for Budget Responsibility. Far more of us worry about inheritance tax than are affected by it.

Ruth Jackson is a personal finance journalist