How much money you can give to children and grandchildren under inheritance tax allowance rules

With the festive season approaching, many will be thinking about giving gifts to loved ones. While presents from regular income won't be subject to inheritance tax, larger gifts may fall under the rules.So whether it's to mark an occasion or to help younger family members get on the property ladder, it might be beneficial to consider inheritance tax (IHT) allowances to avoid an estate being dragged into the IHT net.There's normally no inheritance tax to pay if the value of the estate is below the £325,000 threshold, or everything above it is left to a spouse, civil partner, charity or community amateur sports club.Additionally, giving a home away to children or grandchildren can increase the threshold to £500,000.WATCH NOW: Jacob Rees-Mogg on idea of inheritance tax being scrapped Married couples and those in a civil partnership could see their threshold further increased by adding their late partner's unused threshold to theirs.A person can give gifts during their lifetime, although if they aren't within the allowance, the recipient could be taxed on them by up to 40 per cent if they die within seven years. People can get professional advice from a solicitor or a qualified tax adviser about what can be given away tax-free during their lifetime.There are various types of inheritance tax allowances which apply each tax year, although how much depends on the allowance.Annual exemptionA person can give away a total of £3,000 worth of gifts each tax year without them being included in the value of an estate - known as the "annual exemption".This gift worth £3,000 can be given to one person or distributed between several people.It's also possible to carry any unused annual exemption forward to the next tax year - but only for one tax year.Small gift allowancePeople can give as many gifts of up to £250 per person as they would like each tax year, provided they haven't used another allowance on the same person.Birthday or Christmas gifts which are given from regular income are exempt from inheritance tax.Gifts for weddings and civil partnershipsThere are several gift allowances which can be used for loved ones who are tying the knot.Each tax year, a person can give a tax-free gift to someone getting married or starting a civil partnership.They can give up to:£5,000 to a child£2,500 to a grandchild or great-grandchild£1,000 to any other personIt's possible to combine a wedding gift allowance with any other allowance, but not the small gift allowance.LATEST DEVELOPMENTS:Couples may be able to get £1,000 lump sum from HMRCYou could pass on inheritance tax-free but don’t make ‘costly’ mistakeWhat happens to your pension when you die? How inheriting pensions worksRegular paymentsPeople can make regular payments to another person as a gift, such as to help with their living costs.There isn't a limit to how much can be given tax-free, provided the gift-giver:Can afford the payments after meeting usual living costsPays from their regular monthly incomeThis is known as "normal expenditure out of income". It could include paying rent for one's child, putting money into a children's savings account, or giving financial support to an elderly relative.It's possible to combine the "normal expenditure out of income" allowance with any other allowance, but not the small gift allowance.