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.
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How this is calculated
Lifetime gifts are treated as Potentially Exempt Transfers (PETs) under the Inheritance Tax Act 1984. If the donor survives 7 years, the gift falls outside the estate. If they die within 7 years, the gift is brought back into the estate for IHT purposes — but taper relief 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% |
Important: taper reduces the tax, not the value of the gift. Gifts within the £325k nil-rate band attract no IHT regardless of when they were made.