'Seven-year clock' on gifts and more on IHT

A The IHT rules are the same across the UK. Although there are differences in succession law (which a solicitor would be best placed to give guidance on), the same tax regime applies.

Q How long does probate/confirmation take?

A Confirmation (probate in England) typically takes anywhere between six months and two years. If a person dies without a will, this usually extends the process.

However, IHT is due by the end of the sixth month after the person’s death. If this deadline is missed, the late payment will incur interest (currently 8 per cent).

Q How do charity donations affect IHT?

A Any money given to charities during your lifetime or on death is completely free of IHT.

The “seven-year clock” that applies to gifts to individuals does not apply to donations to charity. If you leave 10 per cent of your net estate (or more) to charity when you die, the rate of IHT your beneficiaries will pay reduces from 40 per cent to 36 per cent.

In the autumn 2025 Budget, it was announced that only donations to UK charities will benefit from the exemption. This restriction applies to any lifetime gifts from 26 November, 2025, or on death from 6 April, 2026.

Q What are the rules for gifting in Scotland?

A Generally speaking, gifts remain within your estate for seven years. Only on survival of seven years is the gift effective for IHT mitigation. If an individual passes away within seven years of giving the gift, it is added back to their estate and may be subject to IHT.

For larger gifts – more than £325,000 per person – taper relief may apply on death between three and seven years of giving the gift to reduce the IHT payable. This is known by many as the “seven-year clock”.

There are a few exceptions to the rule, some of which are noted below:

◆ Annual exemption: everyone is entitled to gift up to £3,000 per tax year

◆ Small gifts exemption: you can give as many gifts of up to £250 each to as many people as you like.

◆ Normal expenditure out of income exemption: you can gift any surplus income you have each year.

If your gift qualifies for any of these exemptions, it is removed from the estate and it is effective for IHT as soon as it is given.

There are various criteria to meet the exemptions above. Inheritance tax and succession planning can be complex, and seeking professional advice (whether that be from a solicitor or a financial planner) is encouraged.

Written by Wendy Morrison, Associate Financial Planner

Acumen Financial Planning Ltd is authorised and regulated by the FCA, FRN 218745. The

content within this article is for information purposes only and should not be regarded as advice.