Presents given earlier than loss of life may nonetheless be topic to inheritance tax – 7 12 months rule defined

Britons might be able to cut back their inheritance tax invoice by giving items. Nevertheless, there are particular guidelines which may imply items are nonetheless taxed.

The seven 12 months rule

No inheritance tax is due on any items somebody provides, so long as they dwell for seven years after giving the items.

The one exception to that is if the present is a part of a belief.

If the present giver dies inside seven years, there could possibly be inheritance tax to pay.

For items given between 4 and 5 years earlier than loss of life, it’s 24 %.

The speed reduces once more for items given 5 to 6 years earlier than loss of life, right down to 16 %.

Presents given six to seven years earlier than loss of life will likely be taxed at eight %.

And naturally, for items given seven or extra years earlier than loss of life, there’s often no tax to pay.