7-year Gift Taper
Work out the IHT due on a gift made within 7 years of the donor's death, applying taper relief and the £325k nil-rate band.
Fill in your details and press Calculate.
How this is calculated
Lifetime gifts to individuals are treated as Potentially Exempt Transfers (PETs) under the Inheritance Tax Act 1984. If the donor survives 7 years from the gift, it falls outside the estate entirely. If they die within 7 years, the gift is brought back into the estate for IHT purposes — but taper relief under s.7(4) reduces the tax on a sliding scale:
| Years between gift and death | Taper relief |
|---|---|
| Less than 3 | 0% |
| 3 to 4 | 20% |
| 4 to 5 | 40% |
| 5 to 6 | 60% |
| 6 to 7 | 80% |
The calculator counts whole calendar years between the gift date and the date of death to pick the band — so a gift made exactly 3 years before death earns the 20% band, and 7 or more completed years means no IHT at all. Where you say the gift (or part of it) sits above the nil-rate band, tax is worked out at the standard 40% rate on the full gift value you enter, then reduced by the taper percentage.
Important: taper reduces the tax, not the value of the gift. If your cumulative gifts in the 7 years before death stay within the £325,000 nil-rate band, no IHT is due on the gift whenever it was made — which is why taper relief only ever helps gifts above the band.
Assumptions and limits: the calculator taxes the single gift you enter and relies on you to say whether the nil-rate band is already used up — it does not cumulate multiple gifts in date order against the band, which is how HMRC actually allocates it (earliest gifts first). It does not deduct the £3,000 annual exemption, small-gift or wedding exemptions, and it does not handle gifts with reservation of benefit or chargeable lifetime transfers into trust, which follow different rules. Tax on a failed PET is normally payable by the recipient of the gift, not the estate.