{"id":1328,"date":"2021-06-03T00:00:00","date_gmt":"2021-06-03T00:00:00","guid":{"rendered":"https:\/\/slacc.co.uk\/index.php\/the-7-year-rule\/"},"modified":"2021-06-03T00:00:00","modified_gmt":"2021-06-03T00:00:00","slug":"the-7-year-rule","status":"publish","type":"post","link":"https:\/\/slacc.co.uk\/index.php\/the-7-year-rule\/","title":{"rendered":"The 7-year rule"},"content":{"rendered":"

If there is any Inheritance Tax to pay on gifts you make during your lifetime, it is charged at 40% on gifts given in the 3 years before you die.<\/p>\n

Gifts made 3 to 7 years before your death are taxed on a reducing, sliding scale known as ‘taper relief’.<\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

Years between gift and death<\/strong><\/p>\n<\/td>\n

\n

Tax paid<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n

\n

less than 3<\/p>\n<\/td>\n

\n

40%<\/p>\n<\/td>\n<\/tr>\n

\n

3 to 4<\/p>\n<\/td>\n

\n

32%<\/p>\n<\/td>\n<\/tr>\n

\n

4 to 5<\/p>\n<\/td>\n

\n

24%<\/p>\n<\/td>\n<\/tr>\n

\n

5 to 6<\/p>\n<\/td>\n

\n

16%<\/p>\n<\/td>\n<\/tr>\n

\n

6 to 7<\/p>\n<\/td>\n

\n

8%<\/p>\n<\/td>\n<\/tr>\n

\n

7 or more<\/p>\n<\/td>\n

\n

0%<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

Example reproduced from GOV.UK website:<\/strong><\/p>\n

 <\/p>\n

Sally died on 1 July 2018. She was not married or in a civil partnership when she died.<\/p>\n

Sally left 3 gifts in the 7 years before her death:<\/p>\n

    \n
  • £300,000 to her brother 6.5 years before her death<\/li>\n
  • £50,000 to her sister 4.5 years before her death<\/li>\n
  • £150,000 to her friend 3.5 years before her death<\/li>\n<\/ul>\n

    Sally is not entitled to any other gift exemptions or reliefs.<\/p>\n

    There is a £325,000 inheritance tax threshold. Anything below this amount is tax free.<\/p>\n

    £300,000 is used up by the gift Sally gave her brother. There is no tax to pay on his gift.<\/p>\n

    The remaining £25,000 is used up by her £50,000 gift to her sister. There’s tax to pay on the amount not covered by the threshold. That means there’s tax to pay on £25,000 of the gift to Sally’s sister at a rate of 24%.<\/p>\n

    The £150,000 gift given to her friend is taxed at a rate of 32%.<\/p>\n

    Sally’s remaining estate was valued at £500,000 and charged at the usual 40% inheritance tax rate. Sally used up the tax-free threshold on gifts given before her death.<\/p>\n

    Gifts are not counted towards the value of your estate after 7 years.<\/p>\n","protected":false},"excerpt":{"rendered":"

    If there is any Inheritance Tax to pay on gifts you make during your lifetime, it is charged at 40% on gifts given in the 3 years before you die. Gifts made 3 to 7 years before your death are taxed on a reducing, sliding scale known as ‘taper relief’. Years between gift and death […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"tags":[],"class_list":["post-1328","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1328","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=1328"}],"version-history":[{"count":0,"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1328\/revisions"}],"wp:attachment":[{"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=1328"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=1328"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=1328"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}