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| Date | Recipient | Type | Amount | Years ago | Taper | Chargeable | |
|---|---|---|---|---|---|---|---|
| No gifts added yet. Add your first gift above. | |||||||
How the 7-year rule works
UK Inheritance Tax brings most lifetime gifts back into the estate if the donor dies within 7 years of making the gift. The first £325,000 of cumulative chargeable gifts uses up the Nil-Rate Band; gifts above the NRB are taxed, with taper relief reducing the rate based on how long the donor survived.
| Years between gift and death | Taper | Effective rate on chargeable gift |
|---|---|---|
| Less than 3 | 0% | 40% |
| 3 to 4 | 20% | 32% |
| 4 to 5 | 40% | 24% |
| 5 to 6 | 60% | 16% |
| 6 to 7 | 80% | 8% |
| 7+ | — | 0% (exempt) |
Important nuance: taper applies above the NRB only
Taper relief only reduces tax on the slice of cumulative gifts that exceeds the £325,000 NRB. The first £325,000 of chargeable gifts in the 7 years before death uses the NRB and is taxed at 40% without any taper (because the NRB usage is itself non-taperable). For most people with moderate gifts, taper relief never actually does anything — the NRB absorbs all the gifts.
What's exempt regardless of timing
- Gifts to spouse / civil partner (UK-domiciled, no limit)
- Gifts to UK charities
- £3,000 annual exemption per donor (carry forward one year if unused)
- £250 small gifts per recipient per year (cannot combine with the £3,000)
- Wedding gifts: £5,000 to your child, £2,500 to grandchild, £1,000 to anyone else
- Regular gifts out of income (must be regular, from income not capital, and not reduce your standard of living)
Gifts with reservation of benefit
If you give an asset away but continue to enjoy it (the classic example: gift the house to children but continue living there rent-free), HMRC treats it as a "Gift with Reservation of Benefit" (GROB) and includes it in your estate regardless of the 7-year rule. The only ways to escape GROB treatment:
- Pay full market rent for any continued use of the gifted asset
- Stop using the asset entirely (move out, in the case of property)
- The benefit must cease at least 7 years before death for the gift to fall outside the estate
This is one of the most common IHT planning mistakes — the assumption that gifting the family home solves IHT while continuing to live in it. It doesn't.
Related calculators and guides
IHT calculator · UK IHT 2026/27 guide · UK tax rates 2026/27