Gift Inheritance Tax taper checker (7-year rule)

How the 7-year rule and taper relief work

1. Count the years from the gift to the death.
2. 7 years or more: the gift is exempt and doesn't use the nil-rate band.
3. Under 7 years: the gift uses the £325,000 nil-rate band first, oldest gift first.
4. Any part above the band is taxed at 40%, cut by taper relief if the gift was more than 3 years before death.

Worked example: a £400,000 gift, with the whole £325,000 band left, and death 4 years and 6 months later. £75,000 is above the band. At 40% that would be £30,000. In the 4 to 5 year band the rate is 24%, so the tax is £18,000. The gift is still worth £400,000; only the tax went down.

For a gift made on 29 February, this checker counts its anniversary in other years as 1 March, the later and more cautious date. GOV.UK doesn't say which day to use.

Sources: GOV.UK: rules on giving gifts · GOV.UK: Inheritance Tax thresholds and interest rates · HMRC Inheritance Tax Manual IHTM14612 · Inheritance Tax Act 1984, s.3A · Inheritance Tax Act 1984, s.7. Rates checked 8 October 2026.

Gifts and taper relief FAQs

What is the 7-year rule?

If you give something away and live for 7 years after, there's no Inheritance Tax on it (unless it went into a trust). If you die within 7 years, the gift counts towards your estate and uses up the £325,000 nil-rate band first, oldest gift first.

Source: GOV.UK: rules on giving gifts

What does taper relief actually reduce?

The tax on the gift, not the gift's value. The full value still counts against the nil-rate band. Taper relief only changes the rate charged on the part above the band: 40% under 3 years, then 32%, 24%, 16% and 8%. So it only helps when your gifts in the 7 years before death add up to more than £325,000. If they don't, there's no tax on the gifts to reduce.

Source: GOV.UK: rules on giving gifts · HMRC manual IHTM14612

What happens on the exact anniversary?

The law says a gift made 7 years or more before death is exempt, so on the 7th anniversary it is out. For the taper steps it says "more than three but not more than four years" and so on, so on the exact 3rd, 4th, 5th or 6th anniversary the higher rate still applies and it drops the next day. This checker follows that wording. If a lot depends on a single day, check with a tax adviser.

Source: Inheritance Tax Act 1984, s.3A · Inheritance Tax Act 1984, s.7

Which gifts don't count at all?

Gifts to a spouse or civil partner who lives in the UK permanently, and gifts to charities or political parties. Also £3,000 a year under the annual exemption (with one year's carry-forward), small gifts of up to £250 per person, wedding gifts (£5,000 to a child, £2,500 to a grandchild, £1,000 to anyone else) and regular gifts out of your income. Enter only the part of a gift that isn't covered by these.

Source: GOV.UK: rules on giving gifts

Who pays the tax on a gift?

Usually the estate. But once you've given away more than £325,000 in the 7 years before death, anyone who got a gift from you in those 7 years has to pay the Inheritance Tax on their gift.

Source: GOV.UK: rules on giving gifts

What if I still use the thing I gave away?

Then it's a "gift with reservation" and it counts as part of your estate, whatever the 7-year clock says. Giving your home to a child and still living there rent-free is the usual example.

Source: GOV.UK: rules on giving gifts

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