Seven-year accumulation (UK inheritance tax)
Inheritance tax uses a cumulative approach: when calculating tax on a chargeable transfer, relevant earlier chargeable transfers in the preceding seven years are taken into account against the available nil-rate band. For a death estate, chargeable transfers in the seven years before death are cumulated. The treatment of potentially exempt transfers, exemptions, changes in the nil-rate band and timing must be checked for the particular calculation.
Worked example
Assume a 2025–26 immediately chargeable transfer of £200,000 follows a relevant earlier chargeable transfer of £150,000 within seven years. Both figures are after exemptions, the nil-rate band is £325,000 and there are no other transfers or adjustments. The earlier transfer leaves £175,000 of band for the new transfer, so £25,000 of the new transfer exceeds it before applying the appropriate tax rate.
Common mistake
Applying a fresh full nil-rate band to every transfer, or assuming the relevant earlier-transfer window is always measured only from the date of death.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |