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Taper relief on lifetime transfers (UK inheritance tax)

Taper relief reduces the inheritance tax charged on a chargeable lifetime transfer within seven years of death when the transfer was made more than three years before death. It reduces the tax attributable to the transfer, not the value transferred or the amount cumulated against the nil-rate band. The percentage of full tax falls with the interval; eligibility and any lifetime tax already paid must be considered.

Worked example

An individual dies in 2025–26, four years and six months after a lifetime gift. Assume the gift is chargeable on death and tax attributable to it before taper is £40,000, with no earlier lifetime tax or other adjustments. The applicable percentage of full tax is 60%, so tax after taper is £24,000.

Common mistake

Reducing the value of the gift rather than the tax, or assuming taper gives relief when no tax is attributable to the transfer.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA TX (UK) Supporting June 2026–June 2027