Free tool · Educational
The 7-year rule on gifts, made visual
Add your gifts and watch the clock: which taper band each gift sits in, and when it leaves your estate. An educational timeline — not a personal tax calculation. No sign-up, no obligation.
Your gifts
Add up to 5 gifts to see where each sits on the 7-year clock.
Gift 1
Allowances that take gifts out of the picture entirely+
A gift covered by an exemption is free of Inheritance Tax from day one — no 7-year clock at all. Before worrying about the timeline, check whether an allowance already covers the gift:
- Annual exemption — £3,000. Give away up to £3,000 in total each tax year free of Inheritance Tax. Unused exemption carries over, but only from the previous tax year — so up to £6,000 in one year if last year's went unused.
- Small gifts — £250 per person. Any number of gifts of up to £250 per person per tax year, as long as that person hasn't also received part of your £3,000 annual exemption.
- Wedding gifts — £5,000 / £2,500 / £1,000. On a marriage or civil partnership: up to £5,000 to your child, £2,500 to a grandchild or great-grandchild, and £1,000 to anyone else.
- Regular gifts from income — no cap. Regular gifts made out of surplus income (not capital) are exempt with no monetary limit — provided they form a pattern and leave you able to maintain your normal standard of living. Records are essential.
- Spouse, civil partner and charity — fully exempt. Gifts to a UK-domiciled spouse or civil partner, and gifts to charity, are exempt entirely — no 7-year clock at all.
The 7-year clock
Band: Within 3 years — 40% band (only if total gifts exceed the nil-rate band)
- Gifts added
- 1
- Still inside the 7-year window
- £50,000
- First gift leaves the window in
- 7 years
The taper bands, as facts
- Within 3 yearsDeath within 3 years of the gift — tax on the gift at the full 40% rate; taper has not started.
- 3–4 yearsDeath 3–4 years after the gift — the rate on the gift tapers to 32%.
- 4–5 yearsDeath 4–5 years after the gift — the rate on the gift tapers to 24%.
- 5–6 yearsDeath 5–6 years after the gift — the rate on the gift tapers to 16%.
- 6–7 yearsDeath 6–7 years after the gift — the rate on the gift tapers to 8%.
- 7+ years7 years or more after the gift — the gift is outside the estate entirely; no Inheritance Tax on it.
How taper relief actually works
- Taper relief reduces the rate of tax charged on a gift — it never reduces the value of the gift itself.
- It only matters where the total of gifts made in the 7 years before death exceeds the £325,000 nil-rate band — tax can only fall on the slice above the band.
- Gifts use up the nil-rate band in chronological order, earliest gift first.
- Most estates' lifetime gifts fall within the nil-rate band, so taper relief rarely bites in practice — the real effect of dying within 7 years is that the gifts use up nil-rate band the rest of the estate would otherwise have had.
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An educational timeline, not a personal tax calculation and not advice. It shows the 7-year clock and the statutory taper bands only — whether any Inheritance Tax would actually be due on a gift depends on your full gift history, the £325,000 nil-rate band (used in chronological order), the exemptions you can claim and the rest of your estate. Wills, LPAs and trusts are not regulated by the FCA. Your actual position would be confirmed by our team.
How the 7-year rule actually works
Most gifts you make to people during your lifetime are ‘potentially exempt transfers’: survive 7 years and the gift falls outside your estate for Inheritance Tax entirely. Die within 7 years and the gift is brought back into the reckoning — but not in the way most people (and many online tools) assume.
Gifts made in the 7 years before death use up the £325,000 nil-rate band first, in chronological order — earliest gift first. Tax can only fall on gifts above that band, and that is the only place taper relief applies: it reduces the rate of tax on the slice above the band (from 40% within 3 years down to 8% in years 6–7), never the value of the gift itself. Because most estates’ lifetime gifts sit comfortably within the band, no tax usually arises on the gifts at all — the real effect of dying within 7 years is that the gifts use up nil-rate band the rest of the estate would otherwise have had. Our guide to gifting and the 7-year rule walks through worked examples.
The allowances that skip the clock entirely
A gift covered by an exemption never starts the 7-year clock. The annual exemption covers £3,000 of gifts per tax year (plus one previous year’s unused exemption), small gifts of up to £250 per person per year are exempt, and wedding gifts are exempt up to £5,000 to a child, £2,500 to a grandchild and £1,000 to anyone else. Regular gifts out of surplus income have no cap at all, and gifts to a spouse, civil partner or charity are exempt entirely.
Keep records — your executors will need them
Whatever you give, write it down: the date, the amount, the recipient and the exemption you are relying on. Executors must declare 7 years of gift history to HMRC, and the gifts-from-income exemption in particular stands or falls on the records you kept. A one-page gift register stored with your will is usually enough. To see how gifts sit alongside the rest of your estate, try our Inheritance Tax calculator.
The 7-year rule: common questions
What is the 7 year rule for Inheritance Tax?+
Most lifetime gifts to individuals are 'potentially exempt transfers'. Survive 7 years from the date of the gift and it falls outside your estate for Inheritance Tax entirely. Die within 7 years and the gift is brought back into the reckoning: it uses up your £325,000 nil-rate band first (in chronological order, earliest gift first), and only the value of gifts above that band can be taxed — with the rate tapering down between years 3 and 7.
How much can you gift tax free in the UK?+
Several exemptions take gifts out of the picture from day one. The annual exemption covers £3,000 of gifts per tax year, and one previous year's unused exemption can carry over (so up to £6,000). Small gifts of up to £250 per person per year are exempt, as long as that person hasn't also had part of your £3,000. Wedding gifts are exempt up to £5,000 to a child, £2,500 to a grandchild or great-grandchild and £1,000 to anyone else. Regular gifts out of surplus income have no cap at all, and gifts to a UK-domiciled spouse, civil partner or charity are exempt entirely.
Does taper relief reduce the gift or the tax?+
The tax rate — never the gift. Taper relief reduces the rate of Inheritance Tax charged on a gift, not the value of the gift brought back into the estate. And it only applies where the total of gifts made in the 7 years before death exceeds the £325,000 nil-rate band, because gifts use the band up in chronological order and tax can only fall on the slice above it. Most estates' gifts sit comfortably within the band, so no tax arises on the gifts themselves and taper relief never comes into play — the real effect is that the gifts use up nil-rate band the rest of the estate would otherwise have had.
What records should I keep of gifts?+
For every significant gift: the date, the amount or asset, who received it, and which exemption (if any) you are relying on. For regular gifts from income, keep a simple income-and-expenditure record showing the surplus the gifts came from. Your executors will have to declare 7 years of gift history to HMRC on form IHT403, often decades later — a one-page gift register kept with your will makes that job straightforward and protects the exemptions you intended to use.
What is the gifts-from-income exemption?+
Regular gifts made out of surplus income are exempt from Inheritance Tax immediately, with no monetary cap and no 7-year clock. Three conditions apply: the gifts must form a regular pattern (for example a standing order or annual habit), they must come from income rather than capital, and they must leave you able to maintain your normal standard of living. It is one of the most generous exemptions available — and one of the most under-used, usually because nobody kept the records to prove it.
What happens if I die within 7 years of making a gift?+
The gift comes back into the Inheritance Tax calculation. Gifts made in the 7 years before death use up the £325,000 nil-rate band first, in chronological order. If the total stays within the band — as it does for most estates — no tax falls on the gifts themselves; their effect is to reduce the band left for the rest of the estate. Where gifts exceed the band, tax is charged on the excess (usually payable by the recipient), and taper relief reduces the rate on that slice from 40% down to 8% depending on how many years passed between the gift and the death.
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