Nothing to pay when the gift lands
For ordinary gifts between individuals, inheritance tax is a death-time calculation, not a transaction tax. Nothing is due when your parents make the gift, and nothing is ever due if they live seven more years. A gift like this is a potentially exempt transfer: it becomes fully exempt on the seventh anniversary, whatever its size, and the value counted if it fails is the value at the date of the gift, not at death. The mechanics are set out in our guide to gifts and the 7-year rule.
When you, the recipient, could owe inheritance tax
If the parent dies within seven years, HMRC lists their non-exempt gifts from those seven years, oldest first, against the £325,000 nil-rate band. Gifts within the band use it up but carry no tax; only value above the band is taxable at up to 40%. Crucially, tax on a failed gift is primarily the recipient's liability, calculated separately from the tax on the rest of the estate, and the people who received the most recent gifts are often the exposed ones because earlier gifts absorb the band first. Taper relief then reduces the tax, not the gift value, on a sliding scale: 32% where death falls three to four years after the gift, down to 8% at six to seven years. It only helps once cumulative gifts exceed the band, because gifts within it are already taxed at 0%. How the wider estate charge works is covered in inheritance tax explained.
Parents living abroad
Whether the seven-year clock matters at all depends on whether your parents are within the scope of UK inheritance tax in the first place. The rules here changed on 6 April 2025 and now turn on long-term UK residence rather than domicile, so a gift of non-UK cash from parents who live abroad and are not long-term UK residents will often sit outside UK inheritance tax altogether, while UK assets remain within scope regardless. The parents may also face gift or estate taxes in their own country, which is a separate question for an adviser there. If the sums are large, it is worth confirming the position on both sides before the transfer rather than after, and pairing the gift with the immediate exemptions such as the £3,000 annual exemption, as covered in reducing inheritance tax.
Keep the paper trail
Keep a record of the date, the amount and the bank transfer, because the executors will one day need to reconstruct seven years of giving, and your own bank or solicitor may ask about source of funds if the money goes towards a property. Horizon UK Tax Solutions advises on cross-border gifts and inheritance tax exposure on a fixed fee agreed upfront; book a free 30-minute clarity call if a large family gift is on the table.