Who pays the tax on a gift?

Primarily the recipient of the gift, where the gifts exceed the nil-rate band. If they do not pay, the liability can fall back on the estate.

Tax · 6 min read

Gifts in the 7 years before death

You are required to report gifts made in the 7 years before death. Most of them turn out to be exempt, but you have to find them first.

Written and reviewed by Ramani Gill, Founder & CEO — Solicitor, TEP, BA, LLM. Last reviewed 2026-08-19.

Exemptions to apply first

Exemption	Limit
Spouse or civil partner	Unlimited, where UK domiciled
Annual exemption	£3,000 a year, one unused year can be carried forward
Small gifts	£250 per recipient per year
Wedding gifts	£5,000 to a child, £2,500 to a grandchild, £1,000 to anyone else
Normal expenditure out of income	Unlimited if regular, from income, and not affecting the donor's standard of living
Charities and qualifying political parties	Unlimited

How taper relief actually works

Taper reduces the tax payable on a gift, not the value of the gift, and only where the gifts alone exceed the nil-rate band. If the total gifts sit inside the band there is nothing to taper.

Years between gift and death	Reduction in tax on the gift
0 – 3	0%
3 – 4	20%
4 – 5	40%
5 – 6	60%
6 – 7	80%

Doing this yourself?

Our guided service walks an executor through valuations, the HMCTS forms and the estate accounts for a one-off £349.

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Gifts with reservation of benefit

Giving away an asset while continuing to enjoy it — most commonly a house the donor keeps living in rent-free — does not remove it from the estate, whenever the gift was made.

Search the bank statements

Executors are expected to make reasonable enquiries, not just to rely on family memory. Seven years of statements is the practical way to find gifts you would not otherwise know about.

GOV.UK — Inheritance Tax on gifts

Common questions

Who pays the tax on a gift?: Primarily the recipient of the gift, where the gifts exceed the nil-rate band. If they do not pay, the liability can fall back on the estate.

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