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ACCA Applied Skills · Taxation (UK) · The use of exemptions in deferring and minimising inheritance tax liabilities

Tom made a gift of £10,000 to his daughter on her wedding day in August 2025. Tom had made no other gifts in the tax year 2025/26 or the previous year. What is the amount of this gift that is exempt as a gift in consideration of marriage?

£5,000 of the gift is exempt. A parent making a gift to a child in consideration of marriage can use a £5,000 marriage exemption. The balance of the £10,000 is not covered by this exemption and would be a potentially exempt transfer, perhaps reduced by an annual exemption.

  1. A£1,000
  2. B£2,500
  3. C£5,000Correct
  4. D£10,000

Explanation

The marriage exemption depends on the donor's relationship to the person marrying. A parent can give £5,000, so £5,000 of the gift is exempt. The £1,000 figure applies to gifts from anyone else, and £2,500 applies to a remoter ancestor such as a grandparent, or to a bride or groom giving to the other party. The remaining £5,000 is a potentially exempt transfer, subject to any annual exemption.

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