Inheritance Tax Taper Relief Explained (2026/27)
Taper relief cuts the inheritance tax rate on gifts made 3–7 years before death. This guide shows the table, when it actually applies, and the mistakes people make with it.
What taper relief is (and is not)
When you die within 7 years of making a gift, the gift is added back to your estate for inheritance tax. Taper relief reduces the tax rate charged on gifts made 3–7 years before death – it does not reduce the value of the gift.
Critically, taper relief only applies if your gifts plus estate exceed the £325,000 nil rate band. If your total is below the threshold, there is no tax to taper.
The taper relief table
| 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% |
Worked example
You gave £400,000 six years before you died, and your estate is worth £100,000. After the £3,000 annual exemption, £397,000 of the gift is chargeable, giving a total of £497,000 against the £325,000 threshold.
The excess of £172,000 is taxed at 40% × 40% (5–6 year taper) = 16% – £27,520. Had the gift been made within 3 years, the whole excess would be taxed at 40%.
Common mistakes
- Thinking taper reduces the gift's value – it reduces the tax rate only.
- Expecting taper below the nil rate band – if total gifts and estate stay under £325,000, no tax and no taper applies.
- Ignoring gift order – HMRC uses the nil rate band against your oldest gifts first.
See the taper applied to your gift
Our calculator works out chargeable amounts and taper relief for 2026/27.
Check your gift →FAQs
What is taper relief on inheritance tax?
It reduces the tax rate on gifts made 3–7 years before death: 80% of the rate at 3–4 years, down to 20% at 6–7 years. It only applies when gifts plus estate exceed the nil rate band.
Does taper relief reduce the value of the gift?
No – it reduces the tax rate on the gift, not its value.
Is taper relief the same as the 7-year rule?
No – the 7-year rule decides which gifts are brought back into your estate; taper relief then reduces the rate on gifts made 3–7 years before death.
Related: Tax-free gifts · 7-year rule guide · IHT Gift Calculator