Editorial note: this guide explains UK tax in general terms only. It is not financial, tax or legal advice and is not specific to any prize offered by Fortune Games. Tax rules and allowances change and depend on your circumstances, so check GOV.UK or speak to a qualified adviser before acting.
Can you gift lottery winnings?
Yes. A UK lottery win is tax-free when you receive it, and there is no separate gift tax in the UK, so you are free to give money to family or friends. The catch is inheritance tax: large gifts can be pulled back into your estate if you die within seven years of making them. For most everyday gifts that is not an issue, but big transfers are worth planning.
The 7-year rule and inheritance tax
Most lifetime gifts are “potentially exempt transfers”. If you live for seven years after making one, it falls outside your estate completely. Die within seven years and the gift can count towards your estate for inheritance tax, which is charged at 40% above the £325,000 nil-rate band. A taper can reduce the tax on gifts made three to seven years before death, but it reduces the tax due, not the value of the gift. Because gifts use up the nil-rate band first, very large transfers need care.
Exemptions that always apply
Several gifts are exempt whenever you make them. You can give up to £3,000 in total each tax year (and carry forward one unused year), make small gifts of up to £250 per person, and give wedding gifts of £5,000 to a child, £2,500 to a grandchild or £1,000 to anyone else. Gifts to a spouse or civil partner are unlimited and tax-free, and regular gifts out of surplus income can also qualify. For anything substantial, a quick word with an accountant or financial adviser is sensible.
Frequently asked questions
Do I pay tax when I give lottery money away?
There is no UK gift tax, so giving the money away does not trigger an immediate charge. The main consideration is inheritance tax if you die within seven years of a large gift.
How much can I give away tax-free each year?
You can give up to £3,000 in total each tax year under the annual exemption, plus small gifts of up to £250 per person and certain wedding gifts, all free of inheritance tax.
What is the 7-year rule?
Most gifts fall outside your estate if you survive seven years after making them. If you die within seven years, the gift can count towards inheritance tax, with a taper on the tax for gifts made three to seven years before death.
Can I give winnings to my spouse tax-free?
Yes. Gifts between spouses or civil partners are generally unlimited and exempt from inheritance tax, provided you are both UK domiciled.
Related guides: What to do if you win the lottery · Tax on competition winnings · Staying anonymous if you win
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