How Much Money Can You Give As A Gift In The UK?

Wrapped gift

It can be hard to know how much money to give as a gift. This is especially true if you are not even from the UK. Today, we will answer some of the most common questions about gifting money in the UK. 

So, what do you need to know about gifting money in the UK?

How much can you gift your children?

Parents can gift up to £3,000 to their children each year without incurring any tax liability. You can also give a larger gift of up to £5,000 per child if you are celebrating a special event such as a wedding and still keep the £3,000 yearly allowance!

Can your kids give more than the tax-free allowance?

UK laws allow you to gift as much money as you want directly to your children. So, yes – you can give your kids more than the tax-free allowance. The only stipulation is if you die within 7 years of making the gift, it would be subject to inheritance tax.

Can I gift money to my children to help them buy a house? 

I’m sure we all as parents would like to help our children save for a house deposit!

Yes. You can gift money to your children to help them buy a house. As long as you do not die within the years of making the gift, the amount would not be subject to inheritance tax

There are some conditions you need to be aware of when giving money to your children. 

  1. The gift to your children must be at least two years old before you give it to them. 
  2. You cannot receive any benefit from the gift yourself. For example, you cannot buy a property with them using their gift. 
  3. Gifts to children who are aged under 18 must be cash gifts. You cannot make long-term loans to them, as they will become liable for income tax on any money received. 

If you are uncertain about anything to do with your gift to your children, you should contact an accountant for advice.

How much money can I gift to my grandchildren?

Grandparents can gift their grandchildren up to £3,000 a year without paying any inheritance tax. This rule applies even if your grandchild lives abroad.

According to Legal And General, you can carry this tax-free allowance into the following year if it is not used. Meaning if you don’t use the full £3,000 one year, the second year you can give them £6,000 tax-free. You cannot carry this into the third year, though.

You could also consider putting this money into a junior isa for your grandkids

What is the small gift tax allowance?

In the UK, there is a limit to the amount you can gift in total before having to pay gift tax. The total yearly small gift tax allowance in the UK is £250 per person. This means that if you give a gift of more than £250, you will have to pay a fee to the government. These fees depend on your annual net income. 

Gifting money whilst on benefits considerations

There are some restrictions on giving gifts and cash if you are receiving certain benefits from the government. For example, if you have been receiving benefits for a while and you are given a cash gift of over £250, you may have to report it to the government. If you fail to do so, you may have to pay a fine or face legal action. 

Does receiving a gift of money affect your government benefits?

Yes. Receiving a gift from a family member can affect your government benefits if you do not report it. The amount of benefits you receive may also be reduced if you receive gifts on a regular basis. 

For example, if you receive a weekly allowance from Universal Credit and you are given a gift once a week, your income will be adjusted downwards and the allowance you will receive will be reduced accordingly. You should report any changes in your personal circumstances to the Department for Work and Pensions.

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