Did you know that you can make a number of gifts that can reduce the value of your estate for Inheritance tax purposes? The £3,000 allowance is a total for you, not for individual relatives.
However, you can use a previous tax year's allowance. If you are looking to do some planning now, you can give £6,000 away tax free before 5 April 2016 to use this year's and last year's allowances (if not already used). From 6 April 2016, you will lose last year's allowance.
Tax is never easy, so speak to someone who knows before embarking on inheritance tax planning.
Does the limit of £3,000 gifted to a relative each year only effectively apply if my estate will be worth over the £325,000 limit when I die? In other words, since my estate is presently worth about £220,000, can I gift away more than £3,000 each year in money gifts to relatives without incurring any future inheritance tax?