Inheritance Tax Gift Calculator (2025/26)
Use our free inheritance tax gift calculator to check whether a gift made in the last 7 years is liable for IHT – including the £3,000 annual exemption, the nil rate band and taper relief.
The 7-year rule for inheritance tax gifts
Gifts you make while alive are Potentially Exempt Transfers (PETs). If you survive 7 years after making a gift, it is completely free of inheritance tax. If you die within 7 years, the gift is brought back into your estate and may use up part of your £325,000 nil rate band – charged in date order, oldest gifts first.
This inheritance tax gift calculator compares your gift plus your estate against the nil rate band. Only the amount above £325,000 is taxed at 40%, reduced by taper relief if the gift was made 3–7 years before death.
Exemptions you can use every year
| Exemption | Amount | Notes |
|---|---|---|
| Annual exemption | £3,000 per tax year | Unused allowance rolls over one year only (max £6,000) |
| Small gifts | £250 per person | Cannot also receive part of the annual exemption |
| Wedding gifts | Child £5,000 · Grandchild £2,500 · Couple £2,500 · Other £1,000 | One-off per marriage |
| Spouse / civil partner | Unlimited | Fully exempt |
| UK charities | Unlimited | Fully exempt |
| Normal expenditure out of income | Unlimited | Regular gifts from surplus income that do not reduce your standard of living |
Taper relief (reduced rate for gifts 3–7 years before death)
| Years between gift and death | % of the 40% rate charged | Effective rate |
|---|---|---|
| 0–3 | 100% | 40% |
| 3–4 | 80% | 32% |
| 4–5 | 60% | 24% |
| 5–6 | 40% | 16% |
| 6–7 | 20% | 8% |
Taper relief only applies where the combined value of gifts and estate exceeds the nil rate band – it never helps if your total is below £325,000.
Inheritance tax gift calculator FAQs
How does the 7-year rule work?
Gifts within 7 years of death are added back to the estate and may attract IHT. Gifts more than 7 years before death are completely exempt. Chargeable gifts use the £325,000 nil rate band in date order, oldest first.
Do I pay IHT on gifts if my estate is below £325,000?
No – tax is only charged on the combined value of gifts and estate above the nil rate band. Below the band, no IHT is due.
What is taper relief?
It reduces the tax rate on gifts made 3–7 years before death (80% at 3–4 years down to 20% at 6–7 years), but only when the estate and gifts together exceed the nil rate band.
How much can I gift tax-free each year?
£3,000 (the annual exemption, rollover one year), £250 per person in small gifts, wedding gifts up to £5,000, and unlimited regular gifts out of your income.
Is money gifted to my spouse or charity taxable?
No – gifts to spouses/civil partners and UK charities are fully exempt.
What is a gift with reservation?
Gifting an asset but continuing to benefit from it. The 7-year rule does not apply and the asset remains in your estate.
I gave my child money for a house deposit – is that a gift?
Yes, it counts as a gift. If you survive 7 years it is fully exempt; within 7 years it uses up the annual exemption first, then the nil rate band.