What is the 7-year rule for gifts?

Gifts you make are normally free of Inheritance Tax if you survive 7 years. Die within 7 years and the gift is added back to your estate; gifts above the £325,000 nil-rate band are taxed, with taper relief from year 3.

How does taper relief work?

Taper relief lowers the tax rate on a failed gift: 40% within 3 years, then 32% (3–4 yrs), 24% (4–5), 16% (5–6) and 8% (6–7). It applies only to the part of gifts above the £325,000 nil-rate band.

Does taper relief reduce the gift or the tax?

Taper relief reduces the tax due on the gift, not the value of the gift. Many people assume the gift itself is tapered — it is the tax that falls.

What gifts are always exempt?

The £3,000 annual exemption, unlimited £250 small gifts per person, wedding gifts (£5,000/£2,500/£1,000), and any gift to a UK spouse, civil partner or charity.

What is the UK Inheritance Tax Gifts & Taper Relief Calculator?

Work out UK Inheritance Tax on a lifetime gift made within 7 years of death. A £400,000 gift given 5 years before death is taxed at 16.0% after taper relief on the £75,000 above the £325,000 nil-rate band — £12,000, a £18,000 saving versus the full 40%. It runs free in your browser on Gera Tools, with nothing uploaded.

UK Inheritance Tax Gifts & Taper Relief Calculator

Name: UK Inheritance Tax Gifts & Taper Relief Calculator
Creator: Gera Tools
License: https://creativecommons.org/licenses/by/4.0/

Get one useful tool a week

Like this tool? Enter your email and we'll send you one genuinely useful Gera tool a week — plus a link to come back to this one. No spam, one-click unsubscribe any time.

This page explains the 7-year rule and taper relief on lifetime gifts, and lets you estimate the Inheritance Tax on a gift made before death. A gift only becomes chargeable if the giver dies within 7 years of making it (a “failed potentially exempt transfer”).

Taper relief table

Taper relief reduces the tax on the gift — not the gift itself — and only on the portion of gifts that exceeds the £325,000 nil-rate band.

Years between gift and death	Tax rate on the gift
Less than 3 years	40.0%
3 to 4 years	32.0%
4 to 5 years	24.0%
5 to 6 years	16.0%
6 to 7 years	8.0%

Worked example — a £400,000 gift given 5 years before death

Step	Amount
Gift	£400,000
Less nil-rate band	−£325,000
Gift above the nil-rate band	£75,000
Tax rate after taper (5 yrs)	16.0%
Tax without taper (full 40%)	£30,000
Inheritance Tax on the gift	£12,000
Saved by taper relief	£18,000

Gift exemptions that are always free of IHT

Annual exemption: £3,000 of gifts each tax year fall straight out of your estate.
Small gifts: unlimited gifts of up to £250 per person per tax year.
Wedding / civil-partnership gifts: £5,000 to a child, £2,500 to a grandchild or great-grandchild, £1,000 to anyone else.
Spouse / civil partner and charity gifts: no Inheritance Tax at all.

Sources & as-of

Nil-rate band, residence nil-rate band, 40% / 36% rates, £2m taper: GOV.UK — Inheritance Tax.
Bands frozen at these levels until 5 April 2030 (end of tax year 2029-30): GOV.UK — IHT nil-rate bands from 6 April 2028.
Residence nil-rate band conditions & taper: GOV.UK — Residence nil-rate band.
Gifts & 7-year taper relief: GOV.UK — Inheritance Tax: gifts.
Data as-of 2026-06-18. This is a planning estimate, not tax advice — confirm your figures with HMRC or a qualified solicitor / financial adviser. Inheritance Tax applies UK-wide (there are no devolved IHT rates).