It can be hard to think of what to get people as a gift. Everyone appreciates money, but for some reason there is some awkwardness about gifting it!

In this post, we’re going to discuss different methods for gifting money, top tips for gifting money stress-free and safely, and discuss any rules you have to follow when giving cash as a gift.
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1. Cash

Giving cash in the form of physical bank notes is a straightforward way to gift money. This is best suited to children who don’t have bank accounts yet or if you have a creative way to gift the cash in mind. You should head to a bank or cashline to get fresh, crisp banknotes to gift.
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Pros:

• The cash is ready to use straight away.
• It’s exciting for young kids to receive cash.
• Good for those without bank accounts yet.
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Cons:

• The recipient needs to go into a bank to deposit the cash.
• Some businesses are cash-free so won’t accept it.
• It’s risky to mail cash.
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2. Cheque

You could write a cheque. This is quite a dated method of gifting money but is still common practice for events like weddings.
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Pros:

• It’s a bit safer to send in the mail than physical cash (but still not totally safe).
• Many banks allow recipients to scan and deposit cheques with your phone.
• You can use your cheque book to record the gift amount.
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Cons:

• You need to make sure you write the name they use on their bank account or they can’t cash it e.g. “Mr and Mrs Smith” can’t deposit the cheque because they don’t have a joint account.
• They might take ages to cash it so you need to remember the money is to come out of your account.
• Some cheques have expiry dates so they may never cash the money.
• Some banks don’t hand out chequebooks anymore so it might be extra effort to order one.
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3. Bank transfer

You can wire money directly from your account to the recipient’s account. This is best suited when a large sum of money is involved, maybe to go towards a big purchase like a car or house.
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Pros:

• Very safe way to transfer money with data encryption.
• There is no extra work for the recipient in order to use the funds.
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Cons:

• You have to check over all details very carefully as you can’t recall the transfer.
• There are limits on how much you can transfer.
• It’s a less exciting way to gift money.
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4. Gift card

You can purchase a gift card or an e-gift card. You can buy a gift card for a single retailer or a multi-retailer gift card so the recipient has more choice. Many prefer gifting gift cards over cash because they feel it looks like they have put more thought into the recipient’s interests.
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Pros:

• Easy to purchase online or in most stores.
• Great for kids without bank accounts.
• Recipient will spend the money on something nice for themself rather than using cash for bills.
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Cons:

• They have expiry dates (usually 12-24 months).
• The recipient may lose or not use all of the money on the gift card so it’s wasted.
• Gift cards can be tampered with before purchasing so scammers steal the money.
• The recipient is restricted to the terms of the card and buying from that retailer.
  
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5. Group collection site

If you’d like to gift money as a group, you can use a group collection site to set up a group collection to pool your funds. You can send a digital greetings card and then forward the money to the recipient via bank transfer or buy an e-gift card.
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Pros:

• Easy to set up and share the link with others to contribute.
• You can set up a fun collection page to share with the recipient.
• Takes the admin stress out of tallying up the collection and handing out your bank details.
• Easy to send gift cards/cash to the recipient on a specific date.
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Cons:

• Only an option if you want to gift money as a group.
• There may be charges to contribute or to withdraw money to a bank account.
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6. Payment app

You can use a variety of peer-to-peer payment apps to transfer money. It works like a bank transfer but you can use their email address or phone number or similar to send rather than inputting all of their bank details. Google Pay and PayPal are good examples of these apps.
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Pros:

• It’s quick and easy.
• The recipient can spend the funds from the app or transfer to their account.
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Cons:

• You may be charged fees for transfer.
• There’s not as much theatre to gifting money this way.
• You both need to have the app and accounts.
• You can’t recall money if you accidentally send it to the wrong person.
  
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7. Stocks/Shares

This is a less common method of gifting money but many people like to gift stocks and shares to new babies or to people celebrating landmark birthdays like 18 or 21. You are essentially gifting them a tiny fraction of ownership of a company.
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Pros:

• They could make way more money than you bought the shares for.
• They don’t need to do anything with it.
• Good way to teach young people the value of investing and how stocks work.
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Cons:

• The value of the stocks could fall dramatically.
• It is a complicated process buying and gifting stocks.
• You and/or the recipient may be liable to various taxes.
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Tips for gifting money

Depending on the method you choose to gift the money, there are a few things you should consider before jumping in:

• Choose the right time and place to gift it.
• Avoid sending anything through the postal mail - it could be stolen.
• Only use reputable companies to wire money or buy gift cards from.
• Check the terms and expiry dates of any gift cards.
• Check if there are any fees for using your method.
• For larger sums of money, make it clear it’s a gift rather than a loan!
• Check if you are liable to pay any tax (read more in the next section).
  
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UK tax rules for gifting money

Sometimes you or the recipient needs to pay tax on cash gifts. Here are the basics:

• You can gift a total of £3,000 per year without tax.
• You can gift small gifts of up to £250 per person each year using your regular income (but not to anyone who has received part or all of the £3,000 above).
• You don’t pay tax on any money gifted to your spouse or civil partner as long as they are based in the UK.
• For weddings, you can gift £5,000 to your children, £2,500 to grandchildren, and £1,000 to anyone else, tax-free.
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Most of the time you are absolutely fine gifting money! But you need to be mindful of tax when it’s a larger sum of money.
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Conclusion

Your recipient will be very grateful for your gift of money! We hope this has cleared up any confusion over the best way for you to gift money for this specific occasion.

If you are interested in giving a gift as part of a group, then here at Givetastic, we would love to help.

You can set up a group collection for a gift for free and within minutes. No matter the occasion, you can create a customised page, share it with friends and family to contribute, and track the growing collection with ease. When the collection deadline arrives, you can buy gift cards, withdraw the cash, or send the cash to the recipient’s bank.

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FAQs

Do I need to declare cash gifts to HMRC?

You don’t need to declare cash gifts you receive on your self-assessment tax return. You may still need to pay inheritance tax on it though.
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How much money can I legally gift to someone in the UK?

You can legally gift someone in the UK any amount of money, as long as the appropriate taxes are paid on it. You can legally gift £3,000 tax-free, as long as you’ve not used any of this £3,000 allowance to gift money to anyone else.
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Can I legally give money as a gift to a friend?

You can. You can give them up to £3,000 per year tax-free (as long as you haven’t gifted anyone else money tax-free that year).
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What is the 7 year rule on inheritance tax?

If the person that gifts the money dies within 7 years of giving it, then the recipient is subject to inheritance tax on the gift.

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