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Original poster

Gifting money -annual exemption being carried over

26 replies

Horehound · 06/05/2021 16:37

Hello, my parents are gifting me £5k but mum was saying she's had to transfer 3k and then maybe pay £2 herself to anything we wanted to buy. I just did a quick Google and see the guidance allows for one year you are able to carry over any unused allowance and so I think this means on one year she could send a max of £6k thus sending me the £5k they want to gift is fine.
Is that correct? And what do we need to do to actually document the gift, if anything?
Thanks.

OP posts:
TrainerBees · 25/11/2025 21:52

Wot23 · 19/11/2025 15:43

Is IHT a genuine concern for you?
never lose sight of the fact inheritance tax is paid by less than 5% of UK estates.
Old adage, do not let the tax tail wag the dog. Don't do things to avoid tax you will never be liable for in the first place!

To answer your Q
if the estate can show that payments did not impact the living standard of the person making them, ie they are expenditure from "excess" income then they are deemed to be part of the normal expenditure of the person paying them and do not count towards the 3k limit.
If on the other hand the amount paid does reduce capital (eg savings balances) then they are not part of the normal expenditure of the person and would count as a gift re the 3k limit.
Paying the bills for a student for a few years all depends on what happens to your total bank balances: down = IHT gift, same or increasing = exempt normal expenditure

IHTM14131 - Lifetime transfers: specific lifetime exemptions: summary - HMRC internal manual - GOV.UK

IHTM14231 - Lifetime transfers: normal expenditure out of income: introduction - HMRC internal manual - GOV.UK

Edited
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IHT is not really a concern but it potentially could be if they include pensions in the mix.
I’m starting to become more financially savvy - so am finding all the ins and outs really interesting.

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