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RAW - Wedding Gift Inheritance Tax Limits Unchanged Since 1975 - RAW

ended 14. August 2026

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Last week, the  Association of Taxation Technicians (AAT) said (here) that the limits relating to how much can be given as a wedding gift tax-free have not changed since 1975, when it was £5,000. It calculates the parent's £5,000 would be just over £40,000 now had it tracked inflation.

The catch is in the wording. HMRC guidance says the gift must be made on or shortly before the wedding and take effect when it happens, so a cheque sent after the day, or a contribution to the honeymoon once the invoices arrive, is outside it.

ATT says more than 30,000 couples marry in August. The one caught is not the wealthy donor with an adviser, but the parent who gives what they can once the bills land. Is this fair?

Unedited views from Newspage experts below.

4 responses from the Newspage community

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Editor
Harvey Dhillon
Founder & CEO at Zmartly
Losing this exemption rarely costs a family anything. A cash gift to your child is a potentially exempt transfer, so it falls out of the inheritance tax sums completely once the donor lives another seven years. It only changes a bill if the donor dies inside that window and the estate, gifts included, comes to more than the £325,000 nil rate band, because the gift then eats into that band before anything else does. So missing the wedding-day window only really costs the parent giving late in life. An exemption that turns on a date rather than a need is arbitrary by design. The relief isn't a dead letter, but it's worth much less than it looks: what it buys is a slice that never counts as a gift at all, for a donor who may not live that long. Fold it into one gifts allowance. A relief this narrow still drags executors into a gifts schedule the annual exemption lets them skip, and paperwork that outlives its own value should go.
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Editor
Scott Gallacher
Director at Rowley Turton
£5,000 is still a meaningful exemption. For a parent whose estate is subject to IHT, it could ultimately save up to £2,000 in tax. If both parents make a £5,000 gift, that could mean a £4,000 saving – or potentially £8,000 across both sets of parents.

But there is no doubt its value has been dramatically eroded.

When the limit was introduced in 1975, the average UK house cost less than £10,000. Two parents each gifting £5,000 could, in very broad terms, have bought their child a house outright. Today, with the average UK house price around £271,000, the same combined £10,000 gift may not even provide a typical deposit.

That illustrates the problem with tax allowances frozen in cash terms for decades: canny governments do not need to abolish them. Inflation gradually does the job for them instead — a form of taxation by stealth.
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Editor
Paul Denley
CEO at Oakham Wealth Management
A £5,000 marriage exemption set in 1975 and never uprated, tells you how the tax system really works: reliefs left to wither by stealth. As the ATT points out, in today’s terms it would be around £40,000. Fiscal drag has turned a meaningful gesture into a token, and the wording makes it worse - give a day too late, or once the honeymoon invoices land, and you lose it entirely.

That can disadvantage ordinary families who give when they can afford to, rather than wealthier donors who can plan around the rules. In practice, few clients bother; the sums are too small and the conditions too fiddly. If a relief is still considered worthwhile, why not make it usable? It should be uprated and simplified, or folded into a single indexed gifts allowance as the OTS proposed in 2019. Otherwise, it is more symbolic than substantive: a tax break nobody uses isn't a relief, it's a relic.
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Editor
David Stirling
Independent Financial Adviser at Mint Wealth
An exemption unchanged since 1975 that would need to be eight times higher to match inflation is not a relief, it's a relic. The wedding gift exemption catches almost nobody it was designed to help and trips up almost everyone who tries to use it, usually because the timing rules are stricter than anyone realises. Giving money at the reception rather than before the ceremony, or transferring funds once the bills arrive, puts the gift outside the exemption entirely.

The wealthy have advisers who know this while everyone else finds out too late. The Office of Tax Simplification recommended fixing it in 2019 and nothing happened. In the meantime, an inheritance tax system already notorious for its complexity has one more unnecessary trap that costs ordinary families money while solving nothing.