Small gifts exemption (UK inheritance tax)
For the 2025–26 assessment basis, outright gifts by one donor to a particular recipient can qualify for the small gifts exemption if the relevant total for that recipient in the tax year does not exceed £250. The exemption is available separately for different recipients, subject to the interaction with other exemptions and the statutory conditions. It is distinct from the donor’s £3,000 annual exemption.
Worked example
In 2025–26 a donor makes an outright £200 gift to each of three different friends. Assuming no conflicting use of another exemption and all conditions are met, each gift can qualify for the small gifts exemption.
Common mistake
Treating £250 as an automatic exempt slice of a larger gift to the same recipient, or confusing this per-recipient rule with the donor’s annual exemption.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |