Gifting assets: IHT rules you need to know

Gifting assets during your lifetime is one of the most common Inheritance Tax planning tools, but the rules around timing and exemptions catch people out if not properly understood.

The seven-year rule

Gifts made more than seven years before death are generally outside your estate for Inheritance Tax purposes. Gifts made within seven years may still be taxable, with tax reducing on a sliding scale ('taper relief') the longer you survive after the gift.

Annual exemptions

You can gift a certain amount each tax year immediately exempt from Inheritance Tax, along with specific exemptions for wedding gifts and small gifts, which can be used every year without waiting seven years.

Gifts with strings attached

A 'gift' where you retain some benefit — such as gifting a house but continuing to live in it rent-free — is often treated differently and may not remove the asset from your estate at all.

Our advice

Gifting strategy needs to fit your actual financial security in later life, not just the tax outcome — we help you plan gifts that make sense both for Inheritance Tax and for your own future needs.