Giving While Living Calculator

Calculate tax-free lifetime gifts using HMRC annual exemptions and the 7-year rule. Plan ahead to reduce your inheritance tax bill while seeing your money benefit loved ones.

Lifetime Gift & IHT Planning Calculator

Frequently Asked Questions

What is the annual gift exemption for IHT?

Each person can give away £3,000 per year completely free of IHT (the annual exemption). Married couples/civil partners each have £3,000 (£6,000 combined). If you didn't use last year's allowance, you can carry it forward one year (up to £6,000 single).

What are small gift exemptions?

You can give any number of people up to £250 each per tax year completely free of IHT, as long as you haven't used another exemption for the same person. These are separate from the £3,000 annual exemption.

What is a Potentially Exempt Transfer (PET)?

A PET is a gift above exempt amounts given to an individual (not a trust). If you survive 7 years after making the gift, it falls out of your estate completely and is free of IHT. If you die within 7 years, taper relief may reduce the IHT owed.

How does taper relief work?

If you die within 7 years of making a PET, IHT is charged but at a reduced rate. After 3 years: 80% of normal IHT. After 4 years: 60%. After 5 years: 40%. After 6 years: 20%. After 7 years: 0%. Note: taper relief only applies when the gift exceeds the nil rate band.

What counts as a regular gift from income?

Gifts that are part of your normal expenditure from income (not capital), are regular/habitual, and leave you with enough to maintain your standard of living are completely exempt from IHT regardless of amount. This is a powerful but under-used exemption.

Can I give £3,000 to multiple people?

The £3,000 annual exemption can be split between any number of people (e.g. £1,000 each to three children). However, the total must not exceed £3,000 per year per person making gifts.

Are gifts to children immediately tax-free?

Not entirely. Gifts above the exempt amounts are PETs — tax-free if you survive 7 years. However, gifts to children are immediately tax-free if they're: wedding/civil partnership gifts (up to £5,000 from a parent), maintenance of dependent children, or regular gifts from income.

What is the wedding gift exemption?

Parents can give £5,000 IHT-free to a child on their wedding/civil partnership. Grandparents can give £2,500. Others can give £1,000. These are per-giver, not per-couple — both parents can give £5,000 each (£10,000 combined).

Should I give assets or cash to reduce IHT?

Cash is simplest. Giving appreciating assets (shares, property) removes future growth from your estate but may trigger CGT at the time of gift (unless using annual CGT exemption). Get advice before gifting non-cash assets.

What happens to my nil rate band after gifts?

Gifts above annual exemptions use your nil rate band on a first-in-first-out basis. If you've made large gifts in the last 7 years, your NRB available for your estate at death may be reduced.

Can I take back a gift if I need the money?

Generally no — gifts must be genuinely given away. If you retain any benefit (e.g. continue living rent-free in a house you 'gifted'), it's a 'gift with reservation of benefit' and remains in your estate for IHT purposes.

How should I document gifts for IHT purposes?

Keep a simple gifts log: date, recipient, amount, and which exemption used. For large PETs, consider a signed letter acknowledging the gift. Executors need this information to complete the IHT400 form for probate.