You are allowed to give away £3,000 in every tax year, and need not to pay Inheritance Tax on it. It is also allowed to carry forward any part or full £3,000 exemption to the next year, if you do not use it before the next year. So, if you have not used your exemption before you can give away £6,000 in a tax year.

This annual exemption can also be used with some other exemptions like civil partnership/wedding ceremony gift exemption. Under this sort of gift exemption, you can give your children £5,000 when they tie a nuptial knot or bind themselves in a civil partnership, and similarly, they can also be given £3,000 in annual exemptions. However, small gifts exemption, and annual exemptions cannot be used together if you want to give someone £3,250 for this purpose.

When it comes to small gifts, you are allowed to give the gifts of £250 value to all those whom you want to give within a tax year, and they are not liable for any sort of Inheritance Tax.

You must keep in mind that a larger sum for instance of £500 can be given, and claim can be made for the first £250 exemption, and this exemption can also be used with some other exemption when you want to give it to some person. It means this small gift exemption can be combined with some other sort of exemption as well.

You can also make the most of them as part of your normal expenditure, and any gifts you give away from your after tax income( excluding your capital) is exempted from this tax as it is a part of your regular expenditures. Your different regular payments like birthdays, Christmas gifts, or gifts for some other occasion can be included in it.

However, you need to make them affordable, and it is better if a record of this after-tax income and other expenditure is kept for this purpose, and it included those gifts, which are given to someone at some routine occasions. It will indicate that the given gifts are regular, and you have sufficient income to cover this sort of gifts without drawing your capital.

The gifts of certain amounts are exempted from Inheritance Tax. For instance, parents can give away £5,000 each, while grandparents, or some other relatives can give away £2,500, and someone else is allowed to be given £1,000. These gifts are presented on the wedding ceremony date, or shortly before it. If the event is cancelled, you can still make this gift without the implication of the exemption.

Inheritance Tax-free maintenance payments can also be made to your wife, or husband, to your former civil partner, or ex-spouse, dependent relatives, or your children that age below 18. These are some of the gifts that are exempted from inheritance tax, and that you can give away to your children at their wedding or civil partnership ceremonies.