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Inheritance Tax

What is the Seven-Year Rule for Inheritance Tax?

The seven-year rule is one of the most widely referenced aspects of Inheritance Tax, but also one of the most commonly misunderstood.

What the seven-year rule means

When a person makes a gift during their lifetime that does not qualify for a specific IHT exemption, that gift is called a potentially exempt transfer (PET). If the person lives for at least seven full years after making the gift, the gift falls completely outside the estate for IHT purposes. If the person dies within seven years, the gift may be brought back into the IHT calculation.

Taper relief

Where a taxable gift was made more than three years before death, taper relief reduces the IHT applicable to that gift on a sliding scale. However, taper relief applies to the tax on the gift, not to the gift’s value, and only becomes relevant where the gift exceeds the available nil rate band.

What executors need to do

As executor, you must declare all gifts made by the deceased in the seven years before death on the IHT403 schedule. This means tracing the deceased’s financial history and establishing what was given, to whom, on what date, and for what value.

YouCanDoProbate includes a structured gifts section in the platform walkthrough. You enter the details of each gift and the platform applies the seven-year rule, the appropriate exemptions, and taper relief (where relevant) automatically.

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Easy step by step process

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Lucia
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Title : I cannot recommend YouCanDoProbate more for a dedicated and high quality service ! When I first registered with YouCanDoProbate I was dubious: as it was an on-line format and I am incredibly poor with anything electronic, but I need not have worried. As soon as I sent a pleas for help my emails were answered and followed up with a phone call from Tom or Adam on the same day, and often within an hour ! They both had lots of patience and understood my concerns (which were really minor issues !) I was never felt to feel foolish and always treated with respect and professionalism. I had recently helped my brother to obtain probate when his wife passed away, and he paid thousands of pounds to a Solicitor for much less than I have had to do with my case. I only hope my application is accepted, and I now have substantial records to refer to regarding the estate due to this process.

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You can do probate is an excellent…

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From my first call to YouCanDoProbate I felt confident in the help I would receive throughout the process of applying for grant of probate for my mum’s estate. The HMRC forms are not complicated but having access to support and having confirmation that no tax is due and that you have declared everything correctly, is very reassuring. It is worth the money for peace of mind and cost much less than hiring a solicitor

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Simon Day
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Additional costs: The probate registry fee of £526 (for all estates over £5,000) and any additional official copies at £2 each. (Payable directly to HM Courts and Tribunals Service by cheque or postal order, enclosed with your application forms).
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© YouCanDoProbate • YouCanDoProbate is a trading name of Kabing Ltd.
YouCanDoProbate is an online platform providing legal forms and information. YouCanDoProbate is not a law firm and is not regulated by the Solicitors Regulation Authority (SRA). Our online probate and inheritance tax service is an online platform providing probate and inheritance tax forms and information to allow you to complete inheritance tax returns and apply for probate yourself. Our telephone, email and livechat support provides guidance only, we do not provide bespoke advice, including estate planning or tax advice and it is not a substitute for a lawyer’s advice about complex estate planning or tax issues.
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