IHTM14180 - Specific lifetime exemptions: small gifts exemption

Under IHTA84/S20, lifetime gifts not exceeding £250 in total value made by one individual to another in any one tax year are exempt. A tax year runs from 6 April to 5 April the following year.

The exemption applies only to

• outright lifetime gifts by one individual to another
• by actual transfers of value IHTA84/S20 (3).

The exemption does not apply to

• transfers into or out of settlement ( IHTM16000), except that we apply it to an absolute gift in trust for a minor
• the deemed PETs ( IHTM04064) under IHTA84/S102 (4) and FA86/S103 (5).
• apportionments made to persons under IHTA84/S94 (transfers by close companies ( IHTM14851)).

A gift exempted under s.20 cannot be taxed as a GWR ( IHTM04071).

The £250 exemption is applied to the value transferred before any grossing up ( IHTM14593). Apply the exemption separately to each donee. It does not matter how many different donees there are, provided each donee is given no more than £250 in the same tax year.

If the gifts to any one donee in the same tax year exceed £250, the s.20 exemption is wholly lost in relation to that donee.

Unlike the annual exemption ( IHTM14141)

• the £250 exemption does not partly exempt a larger gift, and
• it cannot be carried forward to the following year.