Inheritance Tax taper relief

Last Updated: 6 Apr 24 2 min read

Find out how taper relief can reduce the tax payable on lifetime gifts.

  • Gifts may be taxable on your death if they exceed the available nil-rate band.
  • Tax payable on those gifts may be reduced in the form of taper relief.

When taper relief applies

Taper relief applies where:

  • A transfer of value was made more than three years before the transferor's death
  • Inheritance tax is due on the transfer in "its own right".

The relief

Taper relief takes the form of a percentage reduction in the tax which would otherwise be payable on the transfer. It follows that if no tax is payable on the transfer because it doesn’t exceed the nil rate band (after cumulation), there can be no relief.

Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.

The relief doesn’t apply against tax on immediately chargeable transfers unless there is a subsequent death and additional charges are being considered.

The period of the deceased's survival is calculated from the date of the lifetime transfer.


Arthur makes a gift of £300,000 on 1 February 20X6. He dies on 20 June 20X9.

The gift is over three years from the date of death, but its value is below the IHT nil-rate band at the date of death.

There is no tax directly attributable to the gift and so no taper relief applies.

Assume Arthur had made an earlier gift of £100,000 on 1 January 20X6.

After taking into account cumulation, the gift on 1 February 20X6 now exceeds the IHT nil rate band.

Value transferred


January 20X6 transfer


Total chargeable in respect of lifetime gifts


Nil rate band




Taper relief is available on this taxable amount


The amount of the taper relief depends on the length of time by which the deceased survived the transfer. The charge to tax on the transfer is reduced by charging only the following percentages of the full rate (years in the table below mean calendar years, not tax years).

Years between transfer and death

Percentage of full tax rate applied

3 to 4


4 to 5


5 to 6


6 to 7


Alicia makes a gift of £375,000 on 1 February 20X6. She dies on 20 June 20X9. £50,000 of the gift exceeds the £325,000 nil rate band. Full rate of tax on the gift: 40%x £50,000 = £20,000. The gift is within three to four years of the death, so taper relief restricts the tax charge to 80% of the full rate. Revised tax charge: £20,000 x 80% = £16,000. (The relief is £4,000).

The above examples ignore the availability of the annual exemption.


The relevant legislation is to be found in Inheritance Tax Act 1984 section 7(4).

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