IHT taper relief calculator
- Tax on a gift under the 7-year rule
- Correct 32 / 24 / 16 / 8% taper by year
- Applies the £325,000 nil-rate band first
- Shows why small gifts often pay nothing
- No sign-up required
Gift taper relief calculator
Work out the Inheritance Tax on a single lifetime gift if the giver died within 7 years. Nothing is stored or sent anywhere.
Estimate based on the 2026/27 nil-rate band of £325,000 and HMRC taper relief rates. The nil-rate band is set against gifts in date order, and taper relief applies only to the tax on gifts above the band. This models one gift plus any earlier gifts you enter; it doesn't handle chargeable lifetime transfers into trusts or the interaction with the death estate. Not financial or legal advice. Source: HMRC.
How gift taper relief works
Give money or assets away and you generally hope to live another 7 years. Survive that long and the gift is completely outside your estate, with no Inheritance Tax. Die sooner and the gift comes back into the picture, though not always with a tax bill, and taper relief can soften the blow once you're past three years.
The single most misunderstood point: taper relief reduces the tax on a gift, not the value of the gift, and it only ever applies to gifts above the £325,000 nil-rate band. Most gifts pay nothing because they sit inside that band, so there's no tax for the taper to reduce. The calculator above shows this directly, enter a £200,000 gift and the tax is zero regardless of timing.
The taper rates
Taper relief runs from year three to year seven. Gifts in the first three years before death get no relief and are charged at the full 40%. From then on the rate slides down:
| Years between gift and death | Rate of tax on the gift |
|---|---|
| 0 to 3 years | 40% |
| 3 to 4 years | 32% |
| 4 to 5 years | 24% |
| 5 to 6 years | 16% |
| 6 to 7 years | 8% |
| 7 or more years | 0% |
These are the rates HMRC publishes. Note the bands are read as "3 to 4 years", so a gift made exactly 5 years before death sits in the "5 to 6 years" band and is taxed at 16%, not 24%. Getting the band right matters, and it's an easy place to slip a year.
The nil-rate band comes first
Before taper relief even enters the picture, the £325,000 nil-rate band is set against your gifts, in the order you made them. Only gifts that push the running total above £325,000 are taxable, and only that excess is what taper relief applies to.
This is why taper relief is often described as a relief for larger gifts. If you give away £300,000 and die two years later, the whole gift fits inside the nil-rate band, so there's no tax, and the "no taper relief under 3 years" rule is irrelevant. Taper only starts to matter once your gifts in the 7-year window exceed £325,000.
Worked example: a £400,000 gift, 5 years before death
You give a child £400,000 and die 5 years and 2 months later, having made no earlier gifts.
| Step | Amount |
|---|---|
| Gift | £400,000 |
| Nil-rate band applied first | -£325,000 |
| Taxable part of the gift | £75,000 |
| Taper rate (5 to 6 years) | 16% |
| Tax on the gift | £12,000 |
The recipient faces £12,000 of Inheritance Tax on the gift, not 40% of the whole £400,000. Without taper relief (a death within 3 years), the tax on that £75,000 excess would be £30,000, so the relief saves £18,000 here. And because the £325,000 nil-rate band has been used up by the gift, less of it is available against the rest of the estate, which is the second-round effect people often forget.
Who actually pays
When a gift is taxable and total gifts exceed the nil-rate band, it's usually the recipient of the gift who owes the Inheritance Tax on it, not the estate. Someone who received a large gift a few years before the giver died can find themselves with an unexpected bill. Keeping a clear record of gifts, dates and values makes the executors' job far easier and avoids nasty surprises.
Gifts that never count
Plenty of gifts sit outside all of this. The £3,000 annual exemption, £250 small gifts to any number of people, wedding gifts, and regular gifts out of surplus income are exempt straight away and never enter the 7-year calculation. Only gifts above those allowances are potentially exempt transfers that the 7-year rule and taper relief apply to. For the exempt allowances in detail, HMRC's gifts guidance lists them all.
To see the tax on the rest of an estate alongside gifts, use the main inheritance tax calculator. For the property allowance, try the residence nil-rate band calculator.
Taper relief questions
How does taper relief work? If you die 3 to 7 years after a gift, the tax on it is reduced on a sliding scale: 32% at 3 to 4 years, 24% at 4 to 5, 16% at 5 to 6, and 8% at 6 to 7. Full 40% applies under 3 years, and nothing after 7.
Does it apply to every gift? No. Only to the part of your gifts above the £325,000 nil-rate band. Gifts within the band pay nothing, so there's no tax to taper.
What is the 7 year rule? Survive 7 years from a gift and it's outside your estate entirely. Die sooner and it's brought back in, with taper relief available past year three.
Who pays? Usually the person who received the gift, where total gifts exceed the nil-rate band.