US Insights

As we approach the end of 2025, US taxpayers should consider making use of the available US gift and estate tax allowances before year-end. With generous exemptions and exclusions still available, now is an opportune time to review your estate and gifting strategy to ensure it remains efficient and aligned with your long-term goals.

Why Take Action?

The US lifetime gift and estate tax exemption is currently $13.99 million per person for 2025. This has now been permanently extended, rising to $15 million in 2026. For individuals and families with significant wealth, this creates valuable planning opportunities to transfer assets tax efficiently.

In addition:

• The 2026 annual gift tax exclusion will be $19,000 per recipient
• Married US couples can combine their exclusions to gift $38,000 per person tax-free each year
• The 2025 annual exclusion for gifts to a non-US spouse is $190,000

Strategic use of these allowances allows taxpayers to reduce the size of their taxable estate during their lifetime. Annual gifts made within these limits do not count against the lifetime exemption, making them a simple and effective planning tool.

For long-term UK tax residents, certain gifts may also qualify as Potentially Exempt Transfers (PETs) for UK inheritance tax (IHT) purposes, potentially removing them from the UK estate if the donor survives seven years from the date of the gift.

Who Is Affected?

These planning opportunities are particularly relevant for:

• US citizens and green card holders with significant estates
• Individuals with non-US spouses, children, or beneficiaries
• Those considering trust structures or wider succession planning across the US and UK

Cross-border families should be especially mindful of how gifts are treated under both US and UK tax systems, as timing and structure can have a significant impact on overall tax efficiency.

How to Take Action

1. Review 2025 gifts

Assess gifts already made this year to calculate any remaining exclusions.

2. Make year-end gifts

Consider making gifts within the annual exclusion and non-US spouse exclusion before 31 December 2025 to fully utilise available reliefs.

3. Review UK inheritance tax implications

Evaluate whether proposed gifts qualify as PETs or as gifts out of income to optimise both US and UK outcomes.

4. Coordinate with your advisers

Work with your US and UK tax advisers to ensure all gifts are appropriately structured, documented, and reported in both jurisdictions.

Next Steps

With significant lifetime and annual exemptions still available, now is the time to act. Proactive gifting before year-end can help reduce future estate exposure, support family wealth transfer, and ensure your plans remain compliant and efficient across both tax systems.

Reach out to our US/UK Private Client team to see how we can help you.