Two rules share the same seven-year number, and this page is about the tax one. A gift made in life falls out of your estate for Inheritance Tax after seven years. Die sooner and it may be counted, but it is only taxed where the gifts in that period exceed the £325,000 threshold, and even then on a sliding scale.
What counts as a gift
GOV.UK’s list is broad: money; household and personal goods such as furniture, jewellery or antiques; a house, land or buildings; listed shares; and unlisted shares held for less than two years before death (GOV.UK, thresholds, rules and allowances: Rules on giving gifts, checked 1 November 2026). Selling something for less than it is worth is a gift too.
Sell your house to a child below market value and the difference counts as a gift. Paying for something on someone else’s behalf, a new kitchen or a car or a deposit, is a gift of the money, and the annual exemption and the seven-year rule apply to it in the same way.
Anything left in a will is not a gift; it is the estate. The estate is everything you own when you die, and its value decides whether Inheritance Tax is due at all.
Gifts that are never taxed
Gifts between spouses or civil partners carry no Inheritance Tax, with no limit, provided the recipient lives in the UK permanently and the marriage or civil partnership is legal. Gifts to charities and political parties are exempt too (GOV.UK, thresholds, rules and allowances: Rules on giving gifts, checked 1 November 2026). Nothing on this page applies to those.
The annual allowances
Each tax year, running 6 April to 5 April, you can give away £3,000 in total without it being added to your estate: the annual exemption. It can go to one person or be split, and one year’s unused allowance carries forward for one year only (GOV.UK, thresholds, rules and allowances: Rules on giving gifts, checked 1 November 2026).
GOV.UK’s example is a parent giving £2,000 one year and £4,000 the next, with no tax due even on death within seven years.
Three more allowances sit alongside it. You can give as many gifts of up to £250 per person as you like each year, so long as no other allowance has been used on that person. Wedding or civil partnership gifts are exempt up to £5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to anyone else, and can be combined with any other allowance for the same person except the small gift allowance.
The fourth has no cap at all. Regular payments from your income, such as paying a child’s rent, paying into a savings account for a child under 18, or supporting an elderly relative, have no limit at all, provided you can afford them after your usual living costs and they come from your regular monthly income (GOV.UK, thresholds, rules and allowances: Rules on giving gifts, checked 1 November 2026). GOV.UK calls these normal expenditure out of income. Birthday and Christmas presents from regular income are exempt in the same way.
The 7-year rule itself
GOV.UK states it in one sentence: no tax is due on any gifts you give if you live for seven years after giving them, unless the gift is part of a trust (GOV.UK, thresholds, rules and allowances: Rules on giving gifts, checked 1 November 2026). That is the whole rule for anyone who survives the seven years.
If you die within seven years, the gift is counted back into the reckoning, and two things then decide whether any tax is due. The first is the threshold: taper relief, and the tax itself, only apply where the total value of gifts made in the seven years before death is over the £325,000 tax-free threshold. Below that, gifts use up the threshold that would otherwise have covered the estate, but no tax is charged on the gifts themselves.
The second is timing. Gifts given in the three years before death are taxed at the full 40%. Gifts given three to seven years before death are taxed on GOV.UK’s taper:
| Years between gift and death | Rate of tax on the gift |
|---|---|
| Less than 3 | 40% |
| 3 to 4 | 32% |
| 4 to 5 | 24% |
| 5 to 6 | 16% |
| 6 to 7 | 8% |
| 7 or more | 0% |
Source: GOV.UK, thresholds, rules and allowances: Rules on giving gifts, checked 11 September 2026.
GOV.UK’s own worked example is worth reading because it shows both rules at once. A woman gives £50,000 to her brother nine years before she dies, £325,000 to her sister four years and two months before, and £100,000 to a friend three years before. The brother’s gift is outside seven years and untaxed. The sister’s gift sits inside the threshold and is untaxed. The friend’s gift is above the threshold and three years old, so the friend pays 32% on £100,000, which is £32,000. The rest of the estate then pays 40% with no threshold left. Our gifts timeline lays your own gifts out the same way, against today or any date you choose.
Who pays
Usually the estate. GOV.UK says tax due on gifts is paid by the estate unless you gave away more than £325,000 in gifts in the seven years before death, in which case anyone who received a gift in those years pays the tax on their own gift (GOV.UK, thresholds, rules and allowances: Rules on giving gifts, checked 1 November 2026).
That is how the friend in the example above comes to owe £32,000 on money received three years earlier.
Whoever deals with the estate has to work out what was given in the seven years before death, so GOV.UK asks the giver to keep records: what was given, to whom, its value, and when.
The trap: a gift you still benefit from
Giving something away but carrying on using it does not remove it from your estate. GOV.UK calls this a gift with reservation and gives three examples: your home given to a relative while you still live there, a caravan you still holiday in, a painting still on your wall (GOV.UK, thresholds, rules and allowances: Rules on giving gifts, checked 1 November 2026).
A gift with reservation counts towards the estate whenever it was made.
The home is the case that matters. GOV.UK says that if you give your home away and want to keep living in it, you must pay rent to the new owner at the going rate for similar local properties and pay your share of the bills; otherwise it is added to your estate when you die (GOV.UK, thresholds, rules and allowances: Passing on a home, checked 1 November 2026). GOV.UK gives one exception: no rent is due if you give away only part of the property and the new owners also live there. Move out and live seven more years, and there is normally no tax.
The other seven-year rule, which is not seven years
A question about gifts and tax is sometimes a question about care fees in disguise, and that is a different rule under different law. A council assessing what someone pays for care can treat a gift as deprivation of assets if it was made to reduce the contribution, and there is no seven-year cut-off.
The council can recover the shortfall from whoever received the gift. Our deprivation of assets page sets it out, and it is the rule to read first if care is anywhere on the horizon.
Where the thresholds come from
The £325,000 threshold and the taper are set by HMRC and published on GOV.UK. If you leave your home to children or grandchildren and the estate is worth less than £2 million, the threshold can rise to £500,000, and an unused threshold can pass to a spouse or civil partner (GOV.UK, How Inheritance Tax works: thresholds, rules and allowances: Overview, checked 1 November 2026).
Those are the estate’s thresholds; this page is about the gifts that are counted against them.
Whether tax is due on a particular estate is a question for HMRC’s guidance and, where it is close, for a solicitor or tax adviser, which GOV.UK itself suggests.