Gifts that are tax free immediately
Several exemptions take gifts out of inheritance tax from the moment you make them, with no need to survive seven years. The annual exemption covers £3,000 of gifts each tax year, to one person or split between several, and one year's unused exemption can be carried forward, giving up to £6,000. Separately, you can make £250 small gifts to any number of different people, but you cannot combine this with the annual exemption for the same person, and the exemption is lost entirely if a gift to one person exceeds £250. Wedding gifts and regular gifts out of surplus income are also exempt straight away; the income route has no cap, but the gifts must form a habitual pattern and you should keep clear records. Gifts to a spouse or civil partner are exempt without limit where you are both long-term UK residents. Our guide to gifts and the 7-year rule works through each exemption in detail.
Larger gifts and the seven year rule
Anything beyond the exemptions is a potentially exempt transfer. Survive seven years from the date of the gift and it is ignored for inheritance tax, whatever its size. Die within seven years and the gift is brought back into account: it is set against your £325,000 nil-rate band first (the 2026/27 figure), and only value above the band can be taxed at up to 40%. Taper relief can reduce the tax on gifts made three to seven years before death, but it reduces the tax rather than the value of the gift, and it only applies once your cumulative gifts exceed the nil-rate band, so on modest gifting programmes it often never applies. One trap to avoid: if you give something away but keep a benefit from it, such as a house you still live in rent-free, the gift normally stays in your estate. For the wider picture, see how inheritance tax works.