The amount of inheritance tax (IHT) raised from failed gifts under the potentially exempt transfer (PET) rules rose to £315m in 2023-24, up from £256m just three years ago in 2020-21.

Changes to IHT rules coming down the line with next year’s pension pot tax coupled with years of frozen thresholds mean more families use gifting under the seven-year rule to reduce their liability, sometimes with costly consequences.    

More than 5,000 estates paid in excess of £1bn in IHT on lifetime gifts in the tax years 2020- 2024, revealed new figures obtained by NFU Mutual in a freedom of information (FoI) request to HMRC.

The £315m of IHT paid on late gifts in 2023-24 equated to an average of £226,000 for each of the 1,390 estates caught in that year the figures show.