Gift of tax free allowance

If you are married or in a civil partnership and have chosen for your residuary estate to pass to your spouse or civil partner, the interview will automatically ask you whether you wish to include a gift of your tax-free allowance in your will. The tax-free allowance is also known as the nil rate band and is currently set at £325,000.

In the majority of cases, the answer will be ‘no’; the allowance will simply pass to your spouse or civil partner to be used on their death.

There are some circumstances, however, where a gift of the tax-free allowance may be appropriate. Examples include highly appreciating assets or where there is more than one marriage or civil partnership.

Who is to benefit from the gift?

If you do choose to include a gift of the tax-free allowance, the interview will ask you who is to receive the gift. The choices are:

  • your children;
  • your nieces and nephews; or
  • your siblings.

If you think you would like to make a gift of your nil rate band to a different person or to a category of people not listed here, this might require special drafting, such as the creation of a discretionary trust, and you should seek professional advice.

For more information, see our page Nil rate band.