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Absolute Gifts (PETs)

Absolute Gifts (Potentially Exempt Transfers or PETs) are exempt from tax if you live for at least 7 years after making the gift.

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IFA Exeter

Absolute Gifts (PETs)

Absolute gifts that you make during your life time are exempt from inheritance tax provided you live for at least seven years after making the gift. As an Exeter IFA, we can assist you with making gifts. These gifts are known as Potentially Exempt Transfers or PETs. The word absolute is very important because if you retain any benefit from the asset that you have gifted it will not be considered a Potentially Exempt Transfer and therefore still part of your estate. A common error that occurs is where a property has been transferred to another family member, but the donor (the giver) lives in the property rent free. Speak to our Exeter IFA team to learn more about making gifts.

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So what happens if you die before seven years are up?

In the event of your death before seven years have passed since making a gift and the total value of your estate including the gifts is over the inheritance tax threshold for the year that you die; then the inheritance tax will be taken from the estate and not the beneficiary of the gift.


If the gift is over the value of the inheritance tax threshold then the inheritance tax can be paid by either the beneficiary of the gift or by the people representing the estate.


Taper Relief is applied to the gift after three years reducing the value of the gift that would be considered as part of the estate to 80%. The value of the gift is reduced by 20% after each full year until it is totally out of the estate after year seven. My Money People can help you understand this further. Contact our Exeter based IFA team to learn more about gifts

Value of Gift

£200,000

£200,000

£200,000

£200,000

£200,000

£200,000

£200,000

£200,000

Time Since Gift

0-1 years

1-2 years

2-3 years

3-4 years

4-5 years

5-6 years

6-7 years

After 7 years

Taper Relief

0%

0%

0%

20%

40%

60%

80%

200%

Value Added to the Estate

£200,000

£200,000

£200,000

£160,000

£120,000

£80,000

£40,000

£ Zero

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IFA Exeter

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Pick up the phone and speak with one of our Exeter based independent financial advisors today who will be happy to answer your questions. Alternatively, leave us a message and our Exeter IFA team will get back to you as soon as possible.

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