How does inheritance tax taper relief work in the United Kingdom

1. How does inheritance tax taper relief work in the United Kingdom? Inheritance Tax Taper relief the United Kingdom is a tax relief that is applicable when inheritance tax is due on a gift that is made within 7 years prior to the donor's death. More precisely if the donor dies between 3 and 7 years after making a gift, and the total value of gifts that they made is over the threshold, any inheritance tax due on the gifts is reduced on the sliding scale. This is what is known as Taper Relief. Find out how to 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.

2. 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.