Unwrapping Tax Efficient Gifting

The holiday season is a time for joy, celebration, and, of course, giving – so as you prepare your gift list (and check it twice), consider tax efficient gifting.

In a combination of generosity and benefit, tax efficiency is the gift that keeps on giving. By incorporating a few opportunities into your holiday spirit, you could create a win-win for both you and your loved ones.

Annual Gift Allowance

If there were tax efficiency awards, inheritance tax would certainly win for the most-talked-about opportunity.

It’s a key aspect of any tax efficient plan, and a big part of tax efficient gifting – in the UK, gifts made during your lifetime impacts the amount of Inheritance Tax paid on your estate when you pass away.

Gifts made 7 years or more before your passing are exempt from inheritance tax, meaning more of your money goes where you intended it to.

One of the most common ‘bigger’ gifts is money; you can gift a total of £3,000 each tax year[1] without the sum being added to the value of your estate for Inheritance Tax purposes.

Small Gifts and Exemptions

You can spread that wealth, too.

If you haven’t used another allowance on the same individuals, you can gift up to £250 per person[2] to as many people as you like.

Consider making these smaller gifts over the holidays, and get more for your money with exemptions on your estate.

Regular Gifts

The giving spirit doesn’t need to pertain exclusively to the holidays.

For high-net-worth individuals, like our clients, having a regular and steady income means having the ability (should you wish) to make regular gifts out of surplus income[3].

There is no limit to how much you can regularly-gift if you can afford the payments after meeting your own living expenses and you pay the gifts from your regular monthly income.

With this opportunity, you make use of tax exemption opportunities throughout the year (rather than just the holidays, or another event like a wedding gift.

Charitable Giving

Philanthropy and charitable giving has been a hot topic this year. It’s a way for you to have a positive impact on the world around you and the causes you care about whilst also being tax efficient.

Donations to registered charities are typically exempt from Inheritance Tax[4]. Meaning that the charity of your choice gets more from your gift.

And, if you (like many of our clients) are a higher-rate taxpayer, you may also be eligible for additional tax relief on charitable gifts.


There are plenty of other opportunities to optimise throughout the year when it comes to gifting. So, if you’re interested in weaving tax efficiency into your strategy whilst also giving to those you care about, seeking guidance from one of our financial planners is a wise step. By doing so, you can prioritise your loved ones and your financial legacy by getting the most up to date, unbiased, tax efficiency information.


[1] https://www.gov.uk/inheritance-tax/gifts

[2] https://www.gov.uk/inheritance-tax/gifts

[3] https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14255

[4] https://www.gov.uk/donating-to-charity

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

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