Inheritance Tax Act 1984 section 20

Small gifts

Section 20 provides an inheritance tax exemption for small outright gifts of no more than £250 made by one individual to another in a tax year.

• Outright gifts totalling no more than £250 from one person to another in a single tax year (6 April to 5 April) are exempt from inheritance tax.
• The exemption applies per donee — there is no limit on the number of different people who can each receive up to £250 in the same tax year.
• If gifts to any one person exceed £250 in a tax year, the exemption is lost entirely for that person — it does not partially exempt a larger gift.
• Unlike the annual exemption, the small gifts exemption cannot be carried forward to the following year if unused.