How Much Can You Gift Each Year, Free of Inheritance Tax?

Gifts made during your lifetime can reduce the size of your estate, and some are exempt from Inheritance Tax straight away. The simplest is the annual exemption, often called the annual gift allowance. Here is how it works, who can use it, and what it means if the gift is something other than cash, such as a cask of whisky.

What is the annual gift allowance?

Every person has an annual exemption of £3,000. That means you can give away up to £3,000 each tax year without it counting towards your estate for Inheritance Tax. Parents, grandparents and anyone else can use it, and you can give it to anyone: a child, a grandchild, or someone else entirely. You can give it all to one person or split it between several.

Inheritance Tax is generally charged at 40% on the part of an estate above £325,000. Not every estate reaches that, but for those that do, gifts made during your lifetime can make a difference.

How much can two people give?

The allowance belongs to the giver, so two people each have their own. That could be two parents, two grandparents or any two people giving.

• One person: £3,000
• Two people: £6,000
• Two people, with carry forward: up to £12,000

These figures are per tax year (6 April to 5 April) and apply to 2026/27. The £12,000 figure applies only where both people have a full, unused allowance from the previous year.

The allowance belongs to the giver, not the recipient

The £3,000 is a total across everything one person gives in a tax year, however many people receive it. A grandparent who gives £1,000 to each of three grandchildren, for example, has used their whole allowance for that year.

What does carry forward mean?

Carry forward means that any part of last year's allowance you didn't use can be added to this year's. If you gave nothing last year, you can give up to £6,000 this year.

It only goes back one year, and this year's allowance is used first. Whatever is left of last year's allowance is lost when the tax year ends. For 2026/27, that is 5 April 2027.

For example, two parents who gave nothing last year can each give up to £6,000 this year, so £12,000 between them.

Is there a seven-year wait?

No. Gifts within the allowance are exempt from Inheritance Tax straight away. Anything above it is generally exempt only if the giver lives for seven years after making the gift. Larger gifts follow different rules, so it is worth speaking to an adviser.

Gifts don't have to be cash

The allowance applies to the value of whatever you give, including a physical asset such as a cask of whisky. A gifted cask is valued at its market value on the day it is given, which may differ from the price paid. A cask worth £3,000 or less on the day fits within one person's allowance, if they haven't already used it that year. Anything above that falls under the seven-year rule instead.

Gifts of physical assets can raise other tax questions, and this allowance relates to Inheritance Tax only. Other taxes can apply depending on what is gifted and who receives it, and the rules can change, so please speak to your own adviser before making a gift.

Why we're writing about this

MacInnes is led by Jonathan Hook, CEO and a qualified accountant with over 35 years in financial services, so tax rules like these are something we understand and like our clients to understand too.

Sources

Rules and allowances as set out by GOV.UK: Inheritance Tax and Inheritance Tax: gifts.

Want to talk it through?

Speak to the MacInnes team about how cask ownership works. For advice on your own tax position, speak to your own tax adviser. Call 0207 100 7321 or get in touch through the website.

This article is general information, not tax, legal or financial advice. Tax rules can change and their effect depends on individual circumstances. Please speak to a qualified adviser before making any gift. Cask whisky is not a regulated investment. Values can rise or fall and past performance is not a guarantee of future returns.