Farra is a death administration assistant for UK families. Get step-by-step guidance for registering a death, applying for probate, notifying banks, and managing bereavement admin. From essential documents to practical checklists, Farra simplifies estate paperwork and funeral-related tasks so you can focus on what matters.
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Yes — as executor you must declare all gifts the deceased made in the 7 years before death on form IHT403, including gifts you believe are exempt. This guide explains which gifts must be declared, which are genuinely exempt, how to find gifts in the estate records, and what happens if a gift is missed. For background on the 7-year rule itself, see our detailed guide to the 7-year gifting rule and inheritance tax.
Gifts made more than 7 years before death are outside the estate for IHT purposes — they do not need to be declared on IHT403 (though you should note them in your working papers). Gifts made in the 7 years before death must be declared, regardless of their size or whether they resulted in any IHT liability.
The 7-year period runs from the date of the gift to the date of death. A gift made on 1 April 2019 would be within the 7-year period for someone who died on 31 March 2026 (exactly 7 years, so it counts), but would be outside it for someone who died on 2 April 2026.
Where a gift falls in this 7-year window, it is treated as a "potentially exempt transfer" (PET) if made to an individual, or a "chargeable lifetime transfer" (CLT) if made to certain types of trust.
A PET is a gift from the deceased to an individual — a family member, friend, or anyone else who is not a trust. PETs become fully exempt if the deceased survived for 7 years after making the gift. If the deceased died within 7 years, the PET may be taxable:
Note that taper relief reduces the tax rate, not the value of the gift. The full gift value still counts toward the nil-rate band when determining how much of the band has been used before the estate is reached.
A CLT is a gift to a discretionary trust (or certain other types of trust). Unlike PETs, CLTs are immediately chargeable to IHT at the time they are made (at a reduced rate of 20%, with a further charge at death if the donor dies within 7 years). CLTs must always be declared on IHT403 regardless of when they were made, as they affect the nil-rate band calculation at death.
CLTs made more than 7 years before death do not affect the nil-rate band available at death, but CLTs made within 7 years do — they are treated as having "used up" part of the nil-rate band.
Some gifts do not count as chargeable transfers at all. They do not need to be declared on IHT403, although you should document them in case HMRC asks:
Each person can give away up to £3,000 per tax year free from IHT. Any unused annual exemption from the previous year can be carried forward, giving a maximum of £6,000 in one year if the previous year's allowance was unused. The annual exemption covers gifts to one or more people — you can split £3,000 however you choose.
Gifts of up to £250 to any number of individuals in a single tax year are exempt. You cannot apply the small gift exemption to the same person who has received part of the £3,000 annual exemption.
Gifts on the occasion of a wedding or civil partnership are exempt up to the following limits: £5,000 from a parent, £2,500 from a grandparent or party to the marriage, and £1,000 from anyone else. The gift must be made on or shortly before the ceremony.
Regular gifts made from income (not capital) are exempt if they form part of a normal pattern of expenditure and do not reduce the donor's standard of living. This exemption can be highly valuable — regular standing-order payments to children, for example, or regular premium payments on a life insurance policy for a beneficiary. Evidence of the pattern and income source is essential to support this exemption. For more detail on how life insurance is treated, see our guide to life insurance and estate/probate.
Payments for the maintenance of a spouse, civil partner, former spouse, dependent relative, or child in full-time education are exempt, provided they are reasonable and genuinely for maintenance purposes.
Gifts between spouses and civil partners are fully exempt, provided both are UK-domiciled. If the recipient is not UK-domiciled, the exemption is limited to £325,000.
Gifts to UK-registered charities are fully exempt from IHT, regardless of their value or when they were made.
The definition of a gift for IHT purposes is broader than many executors expect. The following all count as gifts and may need to be declared:
This is one of the most important concepts in IHT gift rules, and one that catches many executors off guard. If the deceased gave away an asset but continued to benefit from it, the gift is treated as still being in the estate at death — regardless of when the gift was made. The 7-year rule does not apply to gifts with reservation.
The most common example is where a parent transfers their home to their children but continues to live there rent-free. Despite the legal transfer, the property is still treated as part of the estate for IHT purposes at full open market value at the date of death.
Other examples include:
To escape the reservation of benefit rules, the donor must either give up the benefit entirely or pay full market-rate consideration for continuing to use the asset.
Gifts are declared on form IHT403 ("Gifts and other transfers of value"), which is a supplementary schedule to the IHT400. For each gift you should record:
If the estate qualifies as an "excepted estate" (broadly, no IHT to pay and within the simplified reporting thresholds), a full IHT400 may not be required — but gifts with reservation of benefit must still be reported, as they affect whether the estate qualifies as excepted at all.
Finding gifts takes detective work. Do not rely solely on what family members volunteer — some recipients may not realise they need to disclose a gift, or may prefer not to. As executor, you have a legal duty to make thorough enquiries.
During a compliance check, HMRC routinely requests 7 years of bank statements for all accounts held by the deceased. If those statements show large transfers that do not appear on IHT403, HMRC will ask for an explanation. This is why it is essential to review statements proactively and declare gifts accurately — not to wait for HMRC to find them first.
If you discover after submitting IHT400 that a gift was not declared, submit a C4 corrective account to HMRC as soon as possible. If the missed gift increases the taxable estate, additional IHT and interest will be due. HMRC's approach to honest, promptly disclosed mistakes is generally reasonable — penalties are much lower for unprompted disclosure than for mistakes HMRC discovers itself.
For a full explanation of the correction process, see our guides on what happens if you make a mistake on your probate application and how to avoid an HMRC probate investigation.
Not normally — gifts made more than 7 years before death are outside the IHT estate and do not need to be declared on IHT403. The exception is gifts with reservation of benefit, which remain in the estate indefinitely regardless of when they were made.
You must make reasonable enquiries. Review bank statements, ask family members, and check Land Registry records. If after thorough enquiry you have found no evidence of gifts, you can state this on IHT403. HMRC understands that executors cannot know everything about a deceased person's financial history — provided you have made genuine efforts to find out.
Yes. All gifts in the 7-year period should be declared on IHT403, even those that are fully covered by exemptions. Declaring an exempt gift and showing why it is exempt is far better practice than omitting it and leaving HMRC to wonder why it was not disclosed.
As executor, you have a legal duty to submit an accurate and complete IHT return. You must declare gifts you are aware of, even if the recipient objects. If you knowingly omit a gift to appease a beneficiary, you expose yourself to personal liability for penalties and the additional IHT that HMRC would have charged.
Not necessarily — a genuine loan with an expectation of repayment is an asset of the estate (money owed to the estate), not a gift. However, if the loan was interest-free, HMRC may treat the foregone interest as a series of gifts. And if the loan was formally waived before death, the outstanding balance at the time of waiver counts as a gift at that date. For loans outstanding at death, the balance is an asset to be included in the estate value.
How gifts before death are taxed, taper relief rates, exempt gifts, and what executors need to report on IHT forms.
What triggers HMRC to investigate an inheritance tax return, how to present your IHT400 to minimise scrutiny, and why property valuation and gift declaration are the most important factors.
What to do if you make a mistake on your probate application or IHT400. HMRC penalty rules, the C4 corrective account, unprompted disclosure, and executor personal liability explained.
Complete guide to filing IHT400 with HMRC: who needs to file, schedules required, step-by-step walkthrough, and common mistakes. IHT205 abolished from 2024.
Current IHT thresholds, who needs to pay, exemptions, and how to calculate what's owed on an estate.
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