What is the 7-year rule on gifts in the UK?

Gifts above the annual exemptions are Potentially Exempt Transfers. They fall outside your estate for Inheritance Tax if you survive 7 years from the date of the gift.

What is taper relief?

Taper relief reduces the Inheritance Tax due on gifts made between 3 and 7 years before death — from 32% in years 3–4 down to 8% in years 6–7. It applies only when the gift exceeds the nil-rate band.

How much can I gift each year tax-free?

£3,000 per tax year as an annual exemption, plus £250 to any number of different people, wedding gifts up to £5,000 per child, and unlimited regular gifts from surplus income that don't affect your lifestyle.

Do I need to record gifts?

Yes — keep dated written records of every gift, the value, the recipient and the rule it falls under. Executors will need this for the IHT400 return after death.

Are gifts to a spouse subject to the 7-year rule?

No. Gifts between UK-domiciled spouses or civil partners are exempt from Inheritance Tax with no upper limit and no 7-year rule.

Gifting Rules UK Explained | The 7-Year Rule & Annual Exemptions

Reviewed for accuracy and UK relevance by the Inheritance Money Advice editorial team· Last reviewed May 2026

Quick answer

How does the UK 7-year rule on gifts work?

1
Use your £3,000 annual gift exemption first — these gifts are immediately outside your estate.
2
For larger gifts, the date and value are recorded as a Potentially Exempt Transfer.
3
If you survive 7 years from the gift, it falls completely outside your estate.
4
Die within 7 years and the gift uses your nil-rate band first.
5
Taper relief reduces the tax payable on gifts made 3–7 years before death.

Annual gift exemptions

£3,000 annual exemption — can be carried forward one year if unused
£250 small gifts — to any number of different individuals
Wedding gifts — £5,000 to a child, £2,500 to a grandchild, £1,000 to others
Gifts from surplus income — IHT-free if regular, documented and not affecting your lifestyle

Considering gifting some of your inheritance to family?

A 60-second planner shows the considerations and common next steps for UK beneficiaries.

See what people in your situation usually do

The 7-year rule in practice

Gifts beyond the annual exemptions become Potentially Exempt Transfers (PETs). If you survive 7 years from the date of the gift, it leaves your estate completely. Die within 7 years and the value of the gift is added back when calculating Inheritance Tax.

Taper relief explained

Taper relief reduces the IHT rate on gifts made between 3 and 7 years before death — but only on amounts above the nil-rate band:

0–3 years: 40% (full rate)
3–4 years: 32%
4–5 years: 24%
5–6 years: 16%
6–7 years: 8%

Recording gifts properly

Keep a simple gift log: date, recipient, amount, exemption used. Executors need this for the IHT400 form. A spreadsheet or notebook is sufficient — but it must exist.

Gifts that always stay tax-free

Gifts to a UK-domiciled spouse or civil partner, gifts to UK charities, and gifts to qualifying political parties are exempt from IHT regardless of size or timing.

Educational · UK-focused

Wondering what people in your situation typically do?

A 60-second planner shows the considerations and common next steps for your position — no calls unless you ask.

See what people in your situation usually do

Where to read next

Pair this with our Inheritance Tax Allowance guide, the decision framework on gifting to children, or the full complete guide on what to do with an inheritance.

Published January 2025 · Last reviewed May 2026

Gifting Rules UK Explained — The 7-Year Rule