Gift Taper Relief Calculator
Taper relief reduces the inheritance tax on lifetime gifts made between 3 and 7 years before death. Enter the gift value and when it was made to see the effective rate, the IHT due, and how much the taper saves — no data is sent or stored.
Gift Taper Relief Calculator
Results update instantly as you adjust the inputs.
Taper relief calculation
What is Gift Taper Relief?
When someone dies, HMRC looks back 7 years and adds certain lifetime gifts to the estate for inheritance tax purposes. These are called potentially exempt transfers (PETs). If the donor dies within 3 years of making a gift and the gift exceeds the nil-rate band, the full 40% IHT rate applies to the chargeable amount. If the donor survives longer, taper relief reduces the effective rate progressively.
A common misconception is that taper relief reduces the value of the gift. It does not. Taper relief reduces only the tax on the chargeable portion — the amount of the gift that exceeds any available nil-rate band. If the entire gift falls within the nil-rate band, there is no tax to taper and the relief is irrelevant.
Taper Relief Rates
The bands below are defined by HMRC using the phrase “more than N but not more than N+1 years” before the date of death. The calculator above uses these exact labels so there is no ambiguity about which rate applies at each boundary.
| Years between gift and death | Taper relief | Effective IHT rate |
|---|---|---|
| 0 to 3 years (not more than 3 years before death) | 0% | 40% |
| More than 3, up to 4 years | 20% | 32% |
| More than 4, up to 5 years | 40% | 24% |
| More than 5, up to 6 years | 60% | 16% |
| More than 6, up to 7 years | 80% | 8% |
| More than 7 years | 100% | 0% |
How Taper Relief Is Calculated
The step-by-step calculation is:
- Identify the chargeable amount. Subtract the available nil-rate band from the gift value. The nil-rate band is £325,000 but may be lower if earlier gifts in the 7 years before death have already used part of it. Annual exemptions should be deducted from the gift value before this step.
- Select the correct HMRC time band. Count the complete years between the date of the gift and the date of death. Use the band label exactly as HMRC states it — “more than 4, up to 5 years” is the correct band for a gift made 4 years and 3 months before death.
- Apply the effective rate to the chargeable amount. For example, the 4–5 year band has an effective rate of 24%. Multiply the chargeable amount by this rate to find the IHT due.
Important Rules and Limitations
- Taper relief only applies to gifts that exceed the nil-rate band — if there is no chargeable amount, there is no tax to taper.
- The relief reduces the tax, not the value of the gift itself.
- Gifts to a spouse or civil partner are exempt from IHT entirely and do not affect the nil-rate band.
- Gifts to UK charities and political parties are also exempt.
- The annual exemption of £3,000 per tax year (plus any unused prior year allowance) reduces the value of gifts before taper relief applies.
- Multiple gifts are assessed in chronological order — earlier gifts use up the nil-rate band first, potentially leaving later gifts more exposed.
- From April 2027, unused pension pots will be included in the estate for IHT purposes, which could affect how much nil-rate band is available to shelter gifts made in the 7-year lookback period.
Worked Examples: Gift Taper Relief in Practice
The following examples show how taper relief interacts with the nil-rate band at different gift sizes and time bands. The arithmetic for each example can be verified in the calculator above.
| Example | Gift Value | Band | Chargeable | IHT Due |
|---|---|---|---|---|
| Example 1 | £400,000 | More than 4, up to 5 years | £75,000 | £18,000 |
| Example 2 | £200,000 | Any band | £0 | £0 |
| Example 3 | £500,000 | More than 6, up to 7 years | £175,000 | £14,000 |
Example 1: Gift of £400,000 — More Than 4, Up to 5 Years Before Death
The chargeable amount is the gift value minus the available nil-rate band: £400,000 − £325,000 = £75,000. The “more than 4, up to 5 years” band carries an effective IHT rate of 24% (40% taper relief applied). IHT due: £75,000 × 24% = £18,000. Without taper relief, the same gift made within 3 years of death would have generated £75,000 × 40% = £30,000 of IHT — so the taper saves the estate £12,000.
Example 2: Gift of £200,000 — Any Time Band
The chargeable amount is max(0, £200,000 − £325,000) = £0. The gift falls entirely within the nil-rate band, so there is no IHT to taper. The time band is irrelevant: even a gift made the day before death would attract zero IHT at this value (assuming no earlier gifts have used part of the nil-rate band). This example illustrates the most commonly misunderstood point about taper relief — it only helps when there is already tax to reduce.
Example 3: Gift of £500,000 — More Than 6, Up to 7 Years Before Death
The chargeable amount is £500,000 − £325,000 = £175,000. The “more than 6, up to 7 years” band carries an effective rate of 8% (80% taper relief applied). IHT due: £175,000 × 8% = £14,000. Without taper relief (i.e., if death had occurred within 3 years of the gift), IHT would have been £175,000 × 40% = £70,000 — meaning the taper relief saves the estate £56,000 in this scenario. The donor would need to survive just one more year to bring the IHT bill to zero entirely.
Calculate Your Full IHT Liability
Gift taper relief is one part of your inheritance tax picture. Our full calculator models all gifts together with the nil-rate band, RNRB, spouse transfers, business property relief, and the April 2026 and 2027 reforms.
Calculate My Full IHT →Frequently Asked Questions
What is gift taper relief and when does it apply?
Gift taper relief reduces the inheritance tax on lifetime gifts that exceed the nil-rate band and are made between 3 and 7 years before death. If the donor dies within 3 years of making the gift, the full 40% rate applies to any chargeable amount. The relief then steps down at each year threshold, reaching 0% IHT if the donor survives more than 7 years. Importantly, taper reduces the tax owed — not the value of the gift itself.
Does taper relief apply to all gifts made in the 7 years before death?
No. Taper relief only applies to gifts that exceed the available nil-rate band (NRB). If a gift of £200,000 is made and the donor's NRB of £325,000 has not been used by earlier gifts, there is no chargeable amount and no IHT to taper. The relief is only relevant when the total value of gifts in the 7 years before death exceeds the nil-rate band available to absorb them.
How is the IHT on a gift calculated using taper relief?
First, establish the chargeable amount: the gift value minus any nil-rate band available. Gifts are assessed in chronological order, so earlier gifts use up the NRB before later ones. Apply the taper rate for the relevant time band to the chargeable amount. For example, a £400,000 gift made more than 4 but not more than 5 years before death has a chargeable amount of £75,000 (£400,000 − £325,000). At the 24% effective rate, the IHT due is £18,000.
Can I use the annual gift exemption alongside taper relief?
Yes. The annual exemption (£3,000 per tax year, plus any unused amount from the prior year) reduces the value of a gift before taper relief is considered. Annual exemptions, small gifts exemptions, wedding or civil partnership gifts, and gifts to spouses or charities are all excluded from the taper relief calculation entirely. Only the chargeable portion of a gift — after all exemptions — is subject to taper relief.
What happens if I made multiple gifts in the 7 years before death?
Multiple gifts are assessed in chronological order, and each one uses up available nil-rate band before later gifts are considered. Earlier gifts get first access to the NRB; later gifts may find the NRB already exhausted and face IHT at the taper rate for their time band. This means the order of gifting matters significantly: a large gift made 6 years before death may face lower tax than the same gift made 2 years before death.
How will the April 2027 pension changes affect gifts and taper relief?
From April 2027, unused defined contribution pension pots will be included in the estate for IHT. This does not change how taper relief is calculated on individual gifts, but it increases the size of the estate and can affect the nil-rate band allocation. If a pension pot pushes the total estate above the NRB threshold, gifts that were previously sheltered by the NRB may become partially chargeable. It is worth reviewing any gifting strategy in light of your pension position before April 2027.