07/09/2026
A misunderstanding we correct almost every week.
You make a gift. You do not survive seven years. Someone reassures you that taper relief will reduce the tax.
Taper relief is real. It applies to gifts made between three and seven years before death, and it reduces the tax payable on the gift – 32% at three to four years, then 24%, 16% and 8%, reaching nil at seven.
What it does not do is restore the nil rate the gift used up.
And there is a sting in the order things are applied. The nil-rate band is set against the earliest gifts first. So a gift of £300,000 made five years before death sits entirely inside the nil-rate band, produces no tax at all – and therefore gets no benefit from taper relief whatsoever, while still using up allowance the rest of the estate can no longer claim.
That distinction is worth a great deal of money in the wrong estate, and it catches out people who were confident they had planned properly.
Gifting remains one of the most effective tools available. It just needs doing with the arithmetic in front of you rather than the folk version of the rule – and it needs a dated record, because executors cannot claim what they cannot evidence.
More on the seven-year rule on our site – link in the comments.
General information only - not advice on your circumstances.
