Should I gift some of my inheritance to my children?

Often yes — gifting can support children meaningfully and reduce your own future Inheritance Tax. But it must be planned around the 7-year rule, your own future needs, and the tax position of the recipient.

How much can I gift to my children tax-free?

£3,000 per tax year as your annual exemption (or £6,000 if last year's was unused), plus £250 small gifts to any number of others, wedding gifts up to £5,000 per child, and unlimited regular gifts from surplus income.

What is the best way to gift money to children in the UK?

Common routes include outright cash, pension contributions, Junior ISAs, Lifetime ISAs (for adult children under 40 buying a first home), and bare or discretionary trusts where larger or controlled sums are involved.

Will gifting affect my children's tax or benefits?

The recipient pays no tax on receiving a gift. Income or gains generated after are taxable in the child's name. Larger sums can affect Universal Credit and other means-tested benefits.

Should You Gift Inheritance To Children UK?

Reviewed for accuracy and UK relevance by the Inheritance Money Advice editorial team· Last reviewed May 2026

Quick answer

How should you gift inheritance to children in the UK?

1
Secure your own emergency fund and retirement plan first.
2
Use the £3,000 annual gift exemption (and the £6,000 carry-forward if available).
3
Choose the right wrapper: pension, Junior ISA, Lifetime ISA, or outright cash.
4
For larger sums, consider a Potentially Exempt Transfer and the 7-year rule.
5
Document every gift with date, amount and recipient for executors.

Step 1: Secure yourself first

The most common gifting mistake is giving more than you can comfortably spare. Cover your own emergency fund, retirement and known liabilities before gifting anything significant.

Step 2: Use annual exemptions

Annual exemptions are immediately outside your estate — no 7-year wait. See full detail in our UK gifting rules guide.

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Step 3: Choose the right gifting route

Pension contribution: highly tax-efficient, locked away — best for adult children
Junior ISA: £9,000/year for under-18s, accessible at 18
Lifetime ISA: £4,000/year, 25% government bonus for first home or retirement (ages 18–39)
Cash gift: simple, immediate — recipient controls fully
Trust: for larger or controlled sums; takes legal advice

Step 4: The 7-year rule for larger gifts

Gifts above the exemptions are Potentially Exempt Transfers. Survive 7 years and they fall outside your estate. Read the full rules in our 7-year rule guide.

Step 5: Watch the recipient's position

Large gifts to children on means-tested benefits (e.g. Universal Credit) can reduce or remove entitlement. Gifts to minors are usually held by parents or trustees until adulthood.

Educational · UK-focused

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Where to read next

Pair this with how to reduce IHT legally, our invest-or-save framework, and the full complete guide.

Published January 2025 · Last reviewed May 2026

Should You Gift Inheritance To Your Children?