Depending on the value and type of asset being gifted, gifts made prior to death may be exempt from inheritance tax (IHT). Gifts made in the seven years to death must be considered, along with assets held at death, when calculating the charge to IHT.

This means that an individual must survive seven years before a gift fully escapes IHT on death. An exception to this rule would be a transfer caught by the gift with reservation rules.

Where the gift is a chargeable lifetime transfer, IHT can still arise at the date of the gift, meaning it is not necessarily entirely tax free. A chargeable lifetime transfer is any gift which is not a potentially exempt transfer (PET).