November marks the start of Christmas planning for many Brits. Picking up gifts as you wander winter-lit streets, scrolling online for the perfect present, wrapping everything in front of your favourite, festive film. It’s the thought that counts, after all. But gift giving traditions are quietly shifting and gifting money at Christmas is becoming a thoughtful and genuinely useful, alternative.
Chances are you’ve seen this change in your own family too. Whether its popping £20 in a card for a niece or nephew, transferring money to your 20-something child’s savings account or being the recipient of a little extra help from your in-laws. Gifting money at Christmas has become far more common.
Research shows that under 45s are the most likely to prefer cash over a physical present, with under 25s leading the trend. PayPal studies also suggest almost half of consumers (46%) prefer sending gifts to family and friends and quality time beats any material gifts for more than 80% of people.
So, even if a beautifully wrapped gift under the tree feels more traditionally “Christmassy”, it might be time to change “it’s the thought that counts” to “It’s what’s on the inside that counts”. And for a growing number of us, money is seen as one the most thoughtful and appreciated gifts of the season.
Why gifting money at Christmas is becoming more popular
There’s a mix of lifestyle and economic factors behind the growing popularity of gifting money at Christmas.
Cost of living
Hodge’s 2024 research on the cost of living found 74% of people remain concerned about their day-to-day finances, with many expecting to cut back on both spending and saving in 2025 to keep up with everyday costs. Our August 2025 data also revealed that one in five Brits aren’t currently saving anything from their salary each month, making a financial gift more meaningful than ever.
Cash is king
In line with previous years, the last Friday before Christmas is expected to be the busiest day of the year for ATM withdrawals. Pre-Christmas withdrawals have previously reached as high as £730 million in a single day, according to Link Scheme.
The ‘universal gift voucher’
Gifting money at Christmas means giving flexibility. Teenagers might be saving for driving lessons, adults topping up their savings account or planning a little treat or experience. Whatever the goal, money lets people put the gift exactly where they need it.
On the wish list
Younger generations, particularly Gen Z, increasingly choose cash over a gift voucher or a physical item. And if that’s on their Christmas wish list, giving them money becomes less impersonal and more practical.
Ways to gift money to loved ones this Christmas
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Cash
An immediate ‘open it on the day’ moment is to gift cash on the day. You can also add a personalised note, card or stocking filler.
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Bank transfer
If the sum is larger or your worried about cash getting lost or forgotten, transferring the money can be a good option. It can also feel a little more organised and discreet if needed.
Are there tax implications when gifting money?
For most people, no, there won’t be any tax implications if you choose to gift money at Christmas.
In the UK, the annual exemption is £3,000. This simply means you can give away up to £3,000 in total each tax year without affecting your estate for inheritance tax (IHT). This can be up to £3,000 to one person or split between several.
The tax year runs from 6 April to 5 April the following year.
Small gifts from income are also considered part of your normal spending and generally exempt from tax.
If your considering gifting larger amounts, it can be sensible to note it on your own records or check HRMC guidance.
A quick checklist if you’re thinking of gifting money at Christmas
- Decide if you’d like to give cash, transfer or a savings contribution
- Include a handwritten note to make it personal
- Keep track of larger sums for peace of mind
- Consider whether a savings top-up could be genuinely helpful and appreciated
- Remember, as 80% of people agreed, spending time together is the most meaningful part of Christmas
FAQs
Most small, regular or season gifts are exempt from IHT as they are classed as ‘gifts out of income’. Find out more about exceeding your annual exemption in the HRMC guidance.
There’s no specific limit on how much to gift. Research has found between £20 and £50 are the most common amounts. Just check if you are staying within the annual exemption limit of £3,000 in one tax year.
Absolutely. Gifting money at Christmas is becoming increasingly popular and a preferred gift for many people under 45 and those who value more flexibility.
This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at https://www.unbiased.co.uk/.
Always read the T&Cs.