Before 5 April, married couples and civil partners can confuse spouse-exempt inheritance-tax gifts, the £3,000 annual exemption and Marriage Allowance. The key checks are ownership, whose ISA is used, the relevant relief and the bank records retained.
Gift your spouse freely, but keep ISA ownership real
A gift between UK-domiciled spouses or civil partners is normally exempt from inheritance tax without a cash limit, but an ISA remains the named holder’s asset. Once cash is given unconditionally, it is the recipient’s money, not money the donor can continue to control.
| Rule | What it covers | Usual limit | What it does not do |
|---|
| Spouse exemption | IHT gifts between spouses or civil partners | Normally unlimited | Transfer an ISA allowance |
| Marriage Allowance | Unused Income Tax personal allowance | 10% of the personal allowance | Move savings or investments |
| Gift for spouse’s ISA | Cash your spouse contributes to their ISA | Their remaining ISA limit | Keep the donor as owner |
| Annual IHT exemption | Gifts to any person | £3,000 per donor per tax year | Cap total gifts made |
Can I pay into my spouse’s ISA?
You can give cash to your spouse, who can subscribe to their own Individual Savings Account. The annual ISA limit belongs only to the account holder, even if the money came entirely from their partner. Keep a clear trail from donor, to recipient, to ISA provider.
Marriage Allowance is not a gift allowance
Marriage Allowance lets an eligible lower-earning spouse or civil partner transfer 10% of unused personal allowance to their partner. It may reduce Income Tax, but does not transfer cash, ISA room, investments or legal ownership.
For a 5 April review: first confirm each spouse’s unused ISA room, then decide whether cash is being given outright. Only after that should you check Marriage Allowance eligibility, because it is an Income Tax claim rather than a savings or gifting rule.
Use both £3,000 exemptions before 5 April
Each person has a £3,000 annual inheritance-tax exemption, and unused exemption from the immediately previous tax year can usually be carried forward once. HMRC applies the current year’s exemption first, then the brought-forward amount.
Can I gift £3,000 to each child?
No, £3,000 is normally your total annual exemption, not £3,000 per child. You can give it to one child, divide it between recipients, or make a larger gift and use the exemption against part of it. Each spouse has their own exemption.
Regular income gifts need proof
Regular gifts from surplus income can be immediately outside the estate if they are regular, made from income and leave the donor able to maintain their usual standard of living. Keep income evidence, household costs and records showing that normal spending did not suffer.
Small gifts and wedding gifts can provide separate inheritance tax reliefs, so they should be checked before using the £3,000 gift allowance. You can generally make as many gifts of up to £250 per person in a tax year as you wish, provided that the recipient has not also received another exemption from you for the same gift. Wedding or civil-partnership gifts can also qualify: up to £5,000 from a parent, £2,500 from a grandparent and £1,000 from another person.
For example, a couple might each make a qualifying wedding gift to a granddaughter, then use their annual IHT exemption for additional cash gifts.
For a tax year-end plan, list each spouse's gifts separately. If both spouses have made no gifts in either the current or immediately preceding tax year, each may have up to £6,000 of annual IHT exemption available: £3,000 for the current year plus £3,000 carried forward. Together, that could shelter £12,000 of gifts before 5 April. For example, one spouse could give £6,000 to an adult child and the other £6,000 to a grandchild.
HMRC normally uses the current year's £3,000 first, followed by the unused amount brought forward, so retain a note of the dates, recipients and allocation used.
Choose cash, an ISA or premium bonds by ownership
Give cash where the recipient needs freedom, fund their ISA where they should own tax-free savings, and use Premium Bonds only where they accept uncertain prizes. The decision should start with ownership and time horizon, not a headline rate.
A practical order for money before 5 April
1. Check ownership
Decide who is receiving an outright gift.
2. Use IHT reliefs
Apply the current year’s £3,000 first, then last year’s unused amount.
3. Fill ISA room
The recipient subscribes in their own name.
4. Save evidence
Keep transfers, notes and valuations together.
Should my spouse use an ISA or bonds?
A Cash ISA may suit money needed soon because interest is tax-free and cash does not move with markets. A Stocks and Shares ISA may suit longer-term money but carries investment risk. Premium Bonds protect capital but prizes are not guaranteed.
If a spouse receives £20,000, puts £10,000 into an ISA and gives £10,000 to a child, the first transfer is usually spouse-exempt. The second is the recipient spouse’s gift and may start their own seven-year clock. Record that the original gift was unconditional.
Avoid asset gifts and leave executors evidence
Cash is usually simpler than shares, property or other assets, because non-cash gifts can create capital gains tax, valuation and continued-use issues. A spouse-exempt transfer may still require tax analysis if the asset is later transferred outside the marriage.
Keep one gift record for executors
A gift record should state the date, amount or asset value, recipient, purpose, exemption used, source of funds and document location. Retain bank statements; for shares or property, add an independent valuation and any capital gains tax calculations.
A calm end-of-year check
Start with annual exemptions, assess regular surplus-income gifts, then decide whether to fund a spouse’s ISA. Gift only money you can genuinely let go of, and keep separate bank trails and a clear written note for executors.
This approach is not enough for a complex estate, trusts, business interests, jointly owned property, overseas assets, a spouse or civil partner who is not UK-domiciled, concerns about mental capacity, or likely care-fee needs. Seek regulated financial, tax or legal advice before transferring assets where means-tested benefits or deprivation-of-assets rules could apply.
Make a one-page list of transfers before 5 April, attach bank evidence and check both spouses’ remaining ISA room before moving money.
However, asset transfers need more care than a bank transfer. A gift of shares, a second property or an investment fund to someone other than a spouse may be treated as a disposal at market value for capital gains tax, even where no money changes hands; giving it below market value does not necessarily reduce the CGT calculation. A gift with reservation can also arise if you give away an asset but continue to benefit from it, such as giving a home to a child while living there rent-free.
Transfers involving a non-UK-domiciled spouse, overseas assets or changing residence status need specialist advice, because cross-border IHT treatment may not follow the usual spouse exemption.
FAQs
How much money can I legally give a family member?
You can legally give any amount. The £3,000 annual exemption is an IHT relief, not a legal maximum.
Can I give my son £50,000 in the UK?
Yes. After exemptions, the balance may be relevant to IHT if you die within seven years.
Can I gift £3,000 to each child?
No. The £3,000 annual exemption is normally per donor, not per child, and may be divided between children.
Can I carry forward unused gift allowance?
Yes, but only unused annual exemption from the immediately previous tax year can be carried forward.
Can I give money to my spouse for their ISA?
Yes. The gift is usually IHT-exempt, but the ISA must be in the recipient’s name and the money must genuinely become theirs.
Does Marriage Allowance let me transfer an ISA allowance?
No. Marriage Allowance transfers unused personal allowance for Income Tax, not ISA allowance.
Are Premium Bonds better than an ISA for a gift?
Premium Bonds offer prize chances without a guaranteed return. A Cash ISA may suit predictable tax-free interest, while a Stocks and Shares ISA may suit longer-term investing.
