Technical question on IHT400 on value of gifts on overall chargeable value of estate

retroman62 Posts: 49
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edited 2 October 2023 at 11:46AM in Deaths, funerals & probate
I completed an IHT400 last year on my late father's estate. There were some gifts made (over and above the £3K each year) which I declared on IHT403. in box 7 of IHT403. The section in that form indicates do not include any taper relief on gifts (for gifts between 3 and 7 years before death).
In the IHT calculation at the end of IHT400,  box 113 requires you to put in box 7 from IHT403 which is then added to the chargeable value of the estate before application of nil rate band and transferable nil rate band. 
So , I have paid 40% on value chargeable to tax which includes the full value of the gifts (without any taper relief). I am now at the point where I need to reclaims some IHT (elsewhere on the estate), and I rang HMRC this morning to discuss. They say that the gifts are included at the start of the calculation and are absorbed by the nil rate band, but I don't think this is right. The effect whichever way I look at it, is that I have paid 40% tax on the full value of the gifts, so what's the point of the taper relief if it doesn't get applied anywhere? Anyone else comes across this? Any advice/thoughts?  


  • HappyHarry
    HappyHarry Posts: 1,538
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    Taper relief only applies to gifts in excess of the nil rate band, it does not apply to gifts within the nil rate band.

    Gift values less than the nil rate band simply reduce the size of the available nil rate band. 

    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • Keep_pedalling
    Keep_pedalling Posts: 16,216
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    edited 2 October 2023 at 12:32PM
    Taper relief is only available on gifts exceeding the NRB (£325k) and even then only on the portion exceeding that amount gets it, so if the total of the failed PETs did not exceed that you have nothing to reclaim. Even if it did it still may not be claimable if the gifts were spread over several years as it will apply to the gifts that took the total over the threshold which will be the most recent gifts.
  • OK thanks. My misunderstanding of how it works!
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