Lifetime Gifts to Reduce Inheritance Tax: A Complete UK Guide

Margaret died at 78 with a £950,000 estate—her home worth £575,000, savings of £285,000, and investments of £90,000. Her two adult children faced an inheritance tax bill of £250,000, payable within six months.

What they didn't know was that Margaret had researched lifetime gifting five years earlier but never acted on it. If she had gifted £50,000 to each child annually using her surplus pension income, her estate would have been £450,000 smaller, saving her children £180,000 in inheritance tax.

The gifts would have been completely IHT-free because they qualified as "normal expenditure out of income."

Margaret's story is increasingly common. HMRC collected £8.2 billion in inheritance tax in 2024-25, a 10.8% increase from the previous year, with frozen thresholds pushing more middle-class estates into the 40% tax bracket. But lifetime gifting remains one of the most powerful—and underused—strategies to reduce your IHT bill legally.

This guide explains exactly how lifetime gifts can reduce inheritance tax, which exemptions you can use immediately, and the crucial mistakes that could invalidate your gifting strategy entirely.

Why Lifetime Gifting Matters More Than Ever

Inheritance tax is no longer just a concern for the ultra-wealthy. It's increasingly affecting ordinary families who've worked hard, saved carefully, and built modest estates.

HMRC collected £8.2 billion in inheritance tax in 2024-25, £750 million more than the previous year. This marks the fourth consecutive year of record IHT receipts. The average IHT bill for affected estates now exceeds £200,000.

The main driver? Frozen thresholds creating what's known as "fiscal drag."

The nil-rate band has remained at £325,000 since 2009 and will stay frozen until at least 2030. The residence nil-rate band of £175,000 is also frozen at this level. Meanwhile, house prices have risen dramatically, pushing previously exempt estates into IHT territory.

More changes are coming. From April 2027, pensions will be included in inheritance tax calculations for the first time. Agricultural and business reliefs are being diluted from 2026.

Robert, 68, has a £750,000 estate including his home and pension. Under current rules, his IHT liability is £170,000. But when pensions become taxable in 2027, his £180,000 pension will push his liability to £242,000.

Lifetime gifting offers a solution. Unlike trusts, which are complex and expensive, or life insurance, which involves ongoing premiums, gifting can be free and flexible. You maintain control over when and how much you give, and you get to see your family benefit while you're alive.

But gifting must be strategic. Random gifts without understanding the rules can backfire, creating unexpected tax bills or family disputes.

The £3,000 Annual Exemption: Your Starting Point

The annual exemption is the simplest and most immediate gifting strategy available to every UK taxpayer.

You can gift £3,000 per tax year (April 6 to April 5) completely IHT-free. There's no waiting period. No seven-year rule. The gift is immediately exempt the moment you make it.

You can split the £3,000 between multiple recipients or give it all to one person. For example, you could give £1,500 to each of your two children, or £3,000 to one child.

Here's the part most people miss: unused annual exemption can be carried forward ONE TAX YEAR ONLY.

David didn't make any gifts in 2023-24. In 2024-25, he can gift £6,000—£3,000 for the current year plus £3,000 carried forward from the previous year. But if he doesn't use it in 2024-25, he loses the 2023-24 allowance forever.

This exemption applies per person. If you're married or in a civil partnership, you each have a separate £3,000 allowance. A couple can therefore gift £6,000 per year using their combined exemptions.

Important limitation: If you exceed £3,000 in one tax year, the excess becomes a Potentially Exempt Transfer (PET) subject to the 7-year rule.

Sarah has £5,000 she wants to give her daughter in the 2024-25 tax year. She used her annual exemption last year. The first £3,000 is immediately exempt under her annual exemption. The remaining £2,000 becomes a PET and will only become fully exempt if Sarah survives seven years.

The compounding effect of consistent use is significant:

£3,000 per year × 10 years = £30,000 removed from estate
£6,000 per year (couple) × 10 years = £60,000 removed from estate
At 40% IHT rate, this saves £24,000 in tax

Even if you're not implementing a large-scale gifting strategy, use your £3,000 annual exemption every year. It's a guaranteed £3,000 reduction in your taxable estate, and over time, it adds up.

Small Gifts Exemption: The £250 Rule

The small gifts exemption is separate from the annual exemption and often confused with it. Understanding the distinction is crucial.

You can give as many £250 gifts as you want to as many different people as you want in a single tax year. These are immediately IHT-exempt with no 7-year waiting period.

The critical restriction: You cannot use this for anyone who has already received part of your £3,000 annual exemption in the same tax year.

Helen gives her daughter £3,000 using her annual exemption in April 2025. In December 2025, she wants to give her daughter another £250 as a Christmas gift. This £250 is NOT exempt under the small gifts rule because her daughter already received the annual exemption. However, Helen can give £250 to her son, niece, nephew, friends, or any other person.

The £250 limit is strict. If you give someone £251, the entire amount becomes taxable, not just the £1 excess. This is an all-or-nothing exemption.

Common use cases include:

Birthday gifts to grandchildren
Christmas gifts to multiple family members
Thank-you gifts to friends or caregivers
Celebration gifts for distant relatives

This exemption is most valuable when you have multiple potential recipients. If you have eight grandchildren, you could give each of them £250 annually—£2,000 per year in completely IHT-free gifts.

Practical tip: Keep a simple spreadsheet tracking who received what amount in each tax year. Note the date, recipient, amount, and which exemption you're using. This prevents accidentally exceeding limits and provides documentation for your executors.

Wedding and Civil Partnership Gifts

Special IHT rules apply to gifts made in contemplation of marriage or civil partnership, with different limits based on your relationship to the couple.

Wedding gift exemptions are:

Parents: £5,000 per parent (£10,000 combined if both parents gift)
Grandparents or great-grandparents: £2,500 per grandparent
Anyone else (friends, other family): £1,000

The gift must be made shortly before the wedding or civil partnership. You can't gift £5,000 years in advance and claim the exemption. And if the wedding is called off, the exemption doesn't apply—the gift becomes a PET subject to the 7-year rule.

James and Linda are getting married in June 2025. Each set of parents can gift £10,000 (£5,000 per parent) IHT-free. James's grandmother can gift £2,500. Linda's best friend can gift £1,000. Total: £23,500 in completely IHT-free gifts for this one event.

This exemption works in addition to your annual exemption and small gifts exemption. You could give your child £3,000 using your annual exemption in April, then £5,000 as a wedding gift in June—both fully exempt, total £8,000 in one tax year.

This is also the moment when wealth transfer feels most natural and celebratory. Psychologically, it's easier to make substantial gifts when there's a joyful occasion rather than pure "tax planning." The emotional context makes the gifting feel appropriate and generous rather than calculated.

If you have multiple children or grandchildren who may marry in the coming years, factor these exemptions into your long-term gifting strategy. They provide meaningful one-off opportunities to reduce your estate.

Normal Expenditure Out of Income: The Most Powerful Exemption

This is the exemption most people have never heard of—and the one that could save your family tens of thousands in inheritance tax.

The "normal expenditure out of income" exemption allows you to make regular gifts of ANY AMOUNT from your after-tax income, with NO upper limit and NO 7-year waiting period. If you have surplus income from pensions, rental properties, or investments, this could be the most valuable strategy in your entire estate plan.

Three conditions must ALL be met:

The gift must be "normal" expenditure (part of a regular pattern, not one-off)
Made out of income (not capital or savings—must be from pension, salary, rental income, dividends)
You must have enough income left to maintain your usual standard of living

What does "normal" mean? HMRC guidance says a pattern can be established in three to four years. But critically, even a single gift can qualify if you can demonstrate your intention to continue making similar gifts regularly.

Examples of qualifying gifts:

Monthly payment into a grandchild's Junior ISA (e.g., £500/month = £6,000/year)
Annual payment of university tuition fees for grandchildren
Regular life insurance premium paid on behalf of a child or grandchild
Monthly allowance to an adult child (e.g., £1,000/month = £12,000/year)

Patricia, 68, receives £4,500 per month in pension income. Her living expenses are £2,500 per month, leaving her with £2,000 surplus. She pays £1,000 per month into pensions for her three grandchildren (£333 each).

Over 10 years, she will have gifted £120,000 completely IHT-free. At the 40% tax rate, this saves her estate £48,000. And because the exemption has no monetary limit, she could continue this pattern for the rest of her life.

The massive advantage: Unlike the £3,000 annual exemption or PETs requiring seven-year survival, these gifts are immediately exempt. If Patricia died next month, every penny of those gifts would be outside her estate for IHT purposes.

But here's the catch: evidence requirements are strict.

You must keep detailed records proving:

Regular pattern of gifts (bank statements showing consistent payments)
Income sources and amounts (pension statements, rental income records, dividend statements)
Your living expenses (to prove gifts came from surplus, not necessities)
That gifts came from income, not accumulated capital

Best practice: Write a letter to recipients when you establish the pattern. State clearly: "I intend to make regular gifts of £X per month from my surplus pension income, and I have more than sufficient income to maintain my standard of living after making these gifts."

This letter becomes crucial evidence if HMRC challenges the exemption after your death. Your executors will need to complete Form IHT403 to claim this exemption, and without proper documentation, the claim will fail.

Let's look at a comparison to see the impact:

WITHOUT this exemption:

Estate value: £800,000
Nil-rate band: £325,000
Taxable estate: £475,000
IHT due (40%): £190,000

WITH 10 years of £12,000 annual gifts from income:

Estate value: £680,000 (£800,000 - £120,000)
Nil-rate band: £325,000
Taxable estate: £355,000
IHT due (40%): £142,000

Tax saved: £48,000

If you're a retiree with surplus income, this exemption should be the cornerstone of your IHT planning strategy. Start the pattern now, document everything meticulously, and watch your estate shrink while your family benefits.

Potentially Exempt Transfers and the 7-Year Rule

Once you've exhausted immediate exemptions, the next strategy involves Potentially Exempt Transfers—large gifts that become fully exempt if you survive seven years.

A Potentially Exempt Transfer (PET) is any gift that exceeds the immediate exemptions we've discussed. PETs can be for ANY AMOUNT. There's no upper limit. You could gift £500,000, £1 million, or more.

The 7-year rule is simple: If you survive seven years after making the gift, it becomes completely IHT-exempt. If you die within seven years, it may be subject to inheritance tax.

Here's exactly how PETs are treated:

Years 0-3 after gift: If you die, the gift is taxed at the full 40% rate
Years 3-7 after gift: "Taper relief" reduces the tax rate on a sliding scale
After 7 years: Gift is completely exempt

Taper relief rates are:

Years Between Gift and Death	Tax Rate on Gift
0-3 years	40%
3-4 years	32%
4-5 years	24%
5-6 years	16%
6-7 years	8%
7+ years	0% (exempt)

Important misunderstanding: Taper relief reduces the TAX payable, NOT the value of the gift itself.

You gift £400,000 to your children in 2025 and die in 2030 (five years later). The gift uses up your £325,000 nil-rate band, leaving £75,000 taxable. Without taper relief, the tax would be £30,000 (£75,000 × 40%). With taper relief at 60% reduction, the tax is only £12,000.

Who pays the tax on a failed PET? Generally, the recipient (donee). But the donor's estate has secondary liability if the recipient doesn't pay within 12 months of death.

This creates an important consideration for large gifts. Your children might receive £200,000 from you as a gift, only to face a £30,000 IHT bill if you die within three years. Make sure recipients understand this possibility.

Strategic considerations:

If you're in good health and relatively young (60s or early 70s): Large PETs can be extremely effective. Starting the seven-year clock early maximizes the chance of full exemption.

If you have serious health issues: Focus on immediate exemptions (annual, small gifts, income) instead. PETs requiring seven-year survival carry too much risk.

Robert, 62 and healthy, gifts £200,000 to his daughter in 2025. If he lives until 2032 (age 69), the gift is completely IHT-free—£200,000 removed from his taxable estate. Even if he dies in 2029 (age 66, four years later), taper relief reduces the tax by 40%.

The "seven-year clock" resets with each gift. If you make a large gift every year, you're creating a rolling series of PETs, each with its own seven-year countdown. This is perfectly legal and can be highly effective for gradual wealth transfer.

One caution: Don't gift so much that you compromise your own financial security. You might live another 20 or 30 years. Keep enough for potential care costs, emergencies, and maintaining your lifestyle. As the saying goes, "gift the surplus, not the necessity."

The Gift With Reservation of Benefit Trap

This is where lifetime gifting can go catastrophically wrong—and it's more common than you might think.

A "Gift With Reservation of Benefit" (GWROB) occurs when you gift an asset but continue to benefit from it. The classic example: gifting your home to your children but continuing to live there rent-free.

If HMRC determines a gift is a GWROB, the asset REMAINS in your estate for IHT purposes. The seven-year clock never starts. It's as if you never made the gift at all, completely defeating the point.

In 2023-24, HMRC investigated 220 GWROB cases, finding issues with £61 million in gifts that broke the rules. That's an average of £277,000 per case in additional tax exposure.

The most common mistake: gifting your home to your children but continuing to live there.

Susan, 70, transfers her £400,000 home to her daughter to "avoid inheritance tax." She continues living there rent-free. When Susan dies 10 years later, the full £400,000 is still counted in her estate for IHT purposes, even though the legal ownership changed a decade ago.

Other GWROB examples:

Gifting shares or investments but continuing to receive the income or dividends
Gifting a valuable painting to your child but keeping it displayed in your home
Gifting a holiday home to children but continuing to use it regularly without paying market rent

How to avoid the GWROB trap when gifting property:

Pay full market rent to the recipient under a formal written tenancy agreement
Move out completely and live elsewhere
Gift only a share of the property and continue living there (e.g., gift 50%, retain 50%)—but this is complex and needs legal advice

There is one exception: HMRC allows "insignificant" use. Staying in a gifted property for less than one month per year typically won't trigger GWROB. But tread carefully.

Additional risk: Pre-Owned Assets Tax (POAT) may apply even if you pay market rent in some circumstances, creating an annual income tax charge.

Michael and Karen gifted their £500,000 home to their two children in 2020, then paid market rent of £1,500 per month under a formal tenancy agreement. This avoids GWROB. When Michael died in 2024, the property was not included in his estate. However, they had to pay £18,000 per year in rent for four years—£72,000 total. They saved £200,000 in IHT, so the arrangement worked. But it required careful planning and significant cash flow.

Critical takeaway: Never gift an asset you want to continue using without professional legal and tax advice. The GWROB rules are complex, the stakes are high, and the consequences of getting it wrong can cost your family hundreds of thousands of pounds.

440 families discovered this problem too late in 2023-24 alone. Don't let yours be next.

Strategic Lifetime Gifting: Building a 10-Year Plan

The most effective approach to reducing inheritance tax isn't choosing one exemption—it's layering multiple exemptions annually over seven to ten years or longer.

Let's build a comprehensive gifting strategy for a couple with an £850,000 estate: £500,000 home, £200,000 in ISAs and investments, and £150,000 in savings.

Sample 10-year gifting strategy:

Year 1-10: Annual exemptions

Each spouse uses £3,000 per year = £6,000 annually
Total over 10 years: £60,000

Year 1-10: Small gifts

Give 10 grandchildren £250 each annually = £2,500 per year
Total over 10 years: £25,000

Year 1-10: Normal expenditure out of income

Couple has £2,000 monthly surplus from pensions
Pay £1,000/month into grandchildren's Junior ISAs = £12,000 per year
Total over 10 years: £120,000

Year 5: Wedding gifts

Give two children £5,000 each as parents = £10,000 total (one-off)

Year 2: Large PET

Each spouse gifts £150,000 to their children = £300,000 total
Becomes fully exempt in Year 9 (seven years later)

Total removed from estate after 10 years: £515,000

IHT calculation:

WITHOUT gifting strategy:

Estate: £850,000
Nil-rate band: £325,000
Residence nil-rate band: £175,000
Taxable: £350,000
IHT due: £140,000

WITH gifting strategy:

Estate: £335,000 (£850,000 - £515,000)
Nil-rate band: £325,000
Residence nil-rate band: Not needed
Taxable: £10,000
IHT due: £4,000

Tax saved: £136,000

This isn't theoretical. This is exactly what hundreds of families do every year to legally and effectively reduce their inheritance tax liability.

Key principles for strategic gifting:

Start early: The younger you start, the more time for PETs to become fully exempt and for regular gifts to accumulate.

Document everything: Keep a detailed "gifting diary" in a simple spreadsheet:

Date of gift
Recipient
Amount
Which exemption used
Evidence location (bank statement, letter, etc.)

Review annually: Your circumstances change—income, health, family needs. Adjust your gifting plan each tax year based on current realities.

Coordinate with your will: Your will should account for lifetime gifts to ensure fair treatment of beneficiaries.

If you've given £100,000 to Child A over 10 years but nothing to Child B because Child B was financially secure, your will should address this. You might leave more to Child B to equalise overall inheritance, or include a note explaining your reasoning to prevent disputes.

Some wills include "equalisation clauses" that reduce bequests to beneficiaries who received substantial lifetime gifts. This ensures fairness and prevents resentment.

Emma gifted £150,000 to her son over five years to help him buy a house. Her daughter didn't need help. Emma's will states: "Gifts made to my son during my lifetime totalling approximately £150,000 shall be treated as advancement against his inheritance share." This ensures both children ultimately receive equal treatment.

Share your gifting register with your executors. They can't claim exemptions they don't know about. Many families lose out on legitimate exemptions because executors don't have proper documentation.

Record-Keeping and HMRC Reporting Requirements

Here's something that surprises many people: You do NOT need to report most lifetime gifts to HMRC when you make them. Unless you're making immediately chargeable transfers (like gifts into certain types of trusts), there's no reporting requirement during your lifetime.

But—and this is critical—your executors MUST disclose all gifts made in the seven years before death when settling your estate.

Failure to disclose gifts can result in penalties up to 100% of the tax due. HMRC has up to 20 years to investigate IHT returns if they suspect fraud or negligence.

Your executors will need to complete:

Form IHT403: Schedule of gifts and other transfers of value
For normal expenditure out of income claims: Detailed records of income and expenditure for seven years before death, demonstrating pattern and surplus

Evidence you should keep:

Bank statements showing gift payments and proving regular pattern
Records of income sources (pension statements, rental income records, dividend statements)
Records of living expenses (to prove you had surplus income after covering normal costs)
Letters to recipients stating your intention to make regular gifts from surplus income
Wedding invitations (for wedding gift exemption claims)
Formal tenancy agreements (if paying rent after gifting property)

Create a "lifetime gifts register"—a simple document listing:

All gifts over £250
Date, recipient, amount
Which exemption you believe applies
Location of supporting evidence

Update this register annually. Keep it with your will. Leave clear instructions for executors about where to find it.

George made regular gifts of £15,000 per year from his pension income for eight years, totalling £120,000. He kept meticulous records: monthly bank statements, a letter to his children explaining the gifts, and an annual summary showing his pension income (£52,000) and living expenses (£31,000), proving £21,000 surplus.

When George died, his executors provided this documentation with Form IHT403. HMRC accepted the normal expenditure out of income exemption without challenge. The £120,000 was excluded from George's estate, saving £48,000 in IHT.

Compare this to Linda, who made similar gifts but kept no records. When she died, her executors couldn't prove the gifts came from surplus income rather than capital. HMRC rejected the exemption claim. Linda's family paid £48,000 in unnecessary inheritance tax.

The difference? Documentation.

Without proper records, many families lose out on legitimate exemptions simply because executors can't prove the conditions were met. Your meticulous record-keeping today protects your family's inheritance tomorrow.

Common Mistakes and How to Avoid Them

After working through complex exemptions and strategies, let's focus on the mistakes that catch people out most frequently.

Mistake 1: Confusing annual exemption with small gifts exemption

Many people think they can give £3,000 + £250 = £3,250 to the same person in one tax year. Wrong. You must choose one or the other per recipient per year. You can't stack them for the same person.

Mistake 2: Not carrying forward unused annual exemption

If you didn't gift anything last year, you can use £6,000 this year—but only if you use it THIS year. The carry-forward only works for one year. Many people waste this by not keeping track.

Mistake 3: Making large gifts when in poor health

If you have a terminal illness or serious health condition, focus on immediate exemptions (annual, small gifts, normal expenditure out of income) rather than PETs that require seven-year survival. Be realistic about your health and life expectancy.

Mistake 4: Gifting assets you still need

Don't gift so much that you compromise your own financial security. You might need money for care costs, medical expenses, or simply maintaining your lifestyle for another 20 years. Keep a substantial cushion. Gift the surplus, never the necessity.

Mistake 5: Not coordinating gifts with your will

Your will should acknowledge lifetime gifts to ensure fair distribution. Without this, family disputes are common. "Mum gave you £100,000 ten years ago, but the will splits everything equally? That's not fair!"

Mistake 6: Assuming all gifts are equal for IHT purposes

A £10,000 gift using normal expenditure out of income is immediately exempt. A £10,000 PET requires seven-year survival. The same amount, vastly different tax consequences. Know which exemption applies to each gift.

Mistake 7: No evidence for normal expenditure out of income claims

This exemption is frequently challenged by HMRC. It's the most powerful exemption, so naturally, HMRC scrutinises it closely. Without detailed records and clear evidence of a regular pattern, the claim will fail.

Mistake 8: Gifting to avoid care home fees

IHT planning and care fee planning have completely different rules. Gifting assets specifically to avoid paying for care is called "deprivation of assets," and local authorities can reverse it. Don't confuse legitimate IHT planning with care fee avoidance schemes.

Mistake 9: Making gifts to someone who might predecease you

If the recipient dies before you, depending on their will, the gift may come back into your estate. If you're gifting to someone of similar age or with health issues, consider this risk.

Mistake 10: DIY complex gifting strategies

Using your annual exemption and making small gifts? Fine to do yourself. Making large PETs, gifting property, or setting up trusts? Get professional advice. The stakes are too high and the rules too complex to rely on internet research alone.

Thomas read online about gifting property to reduce IHT. He transferred his £450,000 home to his son and continued living there "for a small rent" of £200 per month—far below market value. HMRC determined this was a GWROB. When Thomas died, the full property value was included in his estate. His family paid £180,000 in IHT that could have been avoided with proper advice costing £2,000.

The lesson? Know your limits. Simple strategies are DIY-friendly. Complex ones require professional guidance.

Frequently Asked Questions

Q: Do I have to pay tax on a gift from my parents in the UK?

A: No, recipients don't pay income tax on gifts in the UK. However, if the donor dies within seven years of making a large gift (a Potentially Exempt Transfer), inheritance tax may be due. The recipient is typically responsible for paying this IHT, though the estate has secondary liability if the recipient doesn't pay within 12 months.

Q: How much money can I gift before paying inheritance tax?

A: You can use the £3,000 annual exemption plus unlimited £250 small gifts to different people without any IHT. For larger gifts, there's no limit—they become Potentially Exempt Transfers (PETs) subject to the seven-year rule. If you survive seven years, the entire gift is IHT-free regardless of amount. Additionally, you can make unlimited gifts from surplus income.

Q: What is the best way to gift money to avoid inheritance tax?

A: The most powerful strategy for retirees is "normal expenditure out of income"—making regular gifts from surplus pension or investment income. This has no monetary limit and is immediately IHT-exempt if you keep detailed records. Combine this with annual exemptions (£3,000) and consider large PETs if you're in good health. Start early to maximize the time for PETs to become fully exempt.

Q: Can I give my house to my children to avoid inheritance tax?

A: You can gift your home, but if you continue living there rent-free, it's a "Gift With Reservation of Benefit" and remains in your estate for IHT. To avoid this, you must either move out completely or pay market rent under a formal tenancy agreement to the new owners. This is legally complex—seek professional advice before gifting property.

Q: Do I need to tell HMRC about gifts I make?

A: Most lifetime gifts don't need to be reported to HMRC when made. However, your executors must disclose all gifts made in the seven years before death when settling your estate. Keep detailed personal records including dates, amounts, recipients, and which exemption applies. Without this documentation, your executors can't claim exemptions and your family may pay unnecessary tax.

Q: How does taper relief work for inheritance tax on gifts?

A: Taper relief reduces the tax rate on gifts made three to seven years before death. It doesn't reduce the gift value, only the tax due on amounts exceeding the nil-rate band. Tax rates are: 3-4 years = 32%, 4-5 years = 24%, 5-6 years = 16%, 6-7 years = 8%, 7+ years = 0%. The relief only applies if the total of all gifts exceeds the £325,000 nil-rate band.

Take Control of Your Estate Planning Today

Lifetime gifting is one of the most effective legal strategies to reduce inheritance tax and ensure your family keeps more of what you've worked a lifetime to build.

Key takeaways:

Start using your £3,000 annual exemption every single tax year—even small consistent gifts remove tens of thousands from your estate over a decade
If you have surplus income from pensions or investments, establish a pattern of "normal expenditure out of income" gifts with detailed documentation—this exemption has no upper limit and is immediately IHT-free
Consider making larger Potentially Exempt Transfers (PETs) if you're in good health and can afford to give assets away—the earlier you start the seven-year clock, the better your chances of full exemption
Keep a detailed "lifetime gifts register" documenting every gift over £250, which exemption applies, and where evidence is stored—your executors cannot claim exemptions without this
Never gift an asset you want to continue using without professional advice, or you'll fall into the Gift With Reservation of Benefit trap that defeats the entire purpose

Watching your children and grandchildren benefit from your wealth while you're alive to see it is one of life's greatest joys. But poor planning—or no planning at all—can cost your family tens or even hundreds of thousands of pounds in unnecessary inheritance tax.

With strategic lifetime gifting, proper documentation, and coordination with your will, you can dramatically reduce your IHT bill while maintaining your own financial security.

Lifetime gifting works alongside your will, not instead of it. Your will ensures any assets you retain are distributed according to your wishes, accounts for gifts you've already made, and prevents family disputes over fairness. Together, lifetime gifting and a properly drafted will form a comprehensive estate plan that protects your family.

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Legal Disclaimer: This article provides general information about UK inheritance tax and lifetime gifting strategies and does not constitute legal or financial advice. Tax rules are complex and your individual circumstances matter. For advice specific to your situation, including the interaction of inheritance tax planning with care fee planning, Capital Gains Tax on gifted assets, or complex estate structures, please consult a qualified solicitor or tax advisor. WUHLD's online will service is suitable for straightforward UK estates; complex situations involving trusts, business assets, or substantial gifting strategies may require professional legal advice.

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