Gift & 7-Year Rule Calculator

Giving money away is the classic IHT move · but survive 7 years or the taxman may still take a slice. See the real liability and the exemptions that make gifts free today.

IHT if Donor Died Today
£0
Enter the gift to calculate
Gift After Exemptions
£0
Nil-Rate Band Left for Gift
£0
Taxable Portion
£0
Taper Relief
0%
Years Until Fully Exempt
·
Immediately Exempt Amount
£0
Enter the gift to get started.
IHT on This Gift by Years Survived

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Gift & 7-Year Rule FAQs

What is the 7-year rule?
A gift to a person (a potentially exempt transfer) becomes fully IHT-free if you survive 7 years. Die within 7 and it counts against your estate · but only the part above your £325,000 nil-rate band is actually taxed, and taper relief softens that if you survived at least 3 years.
How does taper relief actually work?
It reduces the TAX, not the gift's value, and only on the portion above the nil-rate band. 3-4 years: 20% off the tax; 4-5: 40%; 5-6: 60%; 6-7: 80%. The huge misconception: on a gift within the £325,000 band there is no tax, so taper relief does literally nothing · people wrongly think a 4-year-old £100k gift is "partly taxed" when it is fully covered by the band.
What gifts are immediately exempt?
The £3,000 annual exemption (carry forward one unused year for £6,000), small gifts up to £250/person, wedding gifts (£5,000 child / £2,500 grandchild / £1,000 other), anything to a spouse or charity, and gifts out of surplus income. These need no 7-year wait · they are gone from your estate the moment you give them.
What are gifts out of surplus income?
The most powerful underused exemption: regular payments from INCOME (not capital) that do not affect your standard of living are immediately IHT-free · no limit, no 7-year wait. Funding grandchildren's school fees from a pension is the classic example. Keep a simple record showing the gifts were habitual and came from income; executors will need it.
Does the recipient pay the tax?
Not on receipt · but if the donor dies within 7 years and the running total of gifts exceeds the nil-rate band, the recipient can become liable for the IHT on that gift. It catches families out. Large gifts are sometimes covered by a 7-year decreasing-term "gift inter vivos" insurance policy to fund exactly this risk.

For informational purposes only · Not tax advice · England & Wales · NRB £325,000, IHT 40%, taper relief on tax above the band (3-4yr 20%, 4-5 40%, 5-6 60%, 6-7 80%) · Assumes NRB available; large estates and RNRB interactions differ · Take professional advice