Gifting calculator

Making lifetime gifts – gifting – is a popular way to reduce an inheritance tax liability. However, gifts made during a person’s lifetime do not become inheritance tax-free straight away.

This calculator has been created to show the impact that gifting could have on the value of a client’s estate, and the effects of that decision over several years. For those clients that are comfortable with the associated risks, we also compare the estate planning benefits of making a gift with investing in Business Property Relief-qualifying investments.

Keep in mind that client-specific circumstances that are outside of the scope of this calculator may result in different levels of inheritance tax being due. Inheritance tax is a complicated topic and this calculator is intended to help you understand some of the key areas as an easy to use starting point to providing specific advice for your client. It has been prepared in good faith and is based on our understanding and interpretation of the current law, which may change in the future.

To get started, you’ll need a few details about your client’s estate and the amount they intend to gift. If your client intends to leave their estate to their spouse, it may be useful to complete the calculator from the spouse’s perspective. For a refresher on inheritance tax rules, take a look at our Untangling inheritance tax guide.

1
Assessing your situation
Gift
The value of the gift the client intends to make
?
Pound Sterling
Value of the rest of the estate
House icon
House
?
Pound Sterling
Housing icon
Other property
Pound Sterling
Piggy bank icon
Savings
Pound Sterling
Graph icon
Investments
Pound Sterling
Car ring and vase icon
Other
?
Pound Sterling
Total estate value, including intended gift:
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£ 0
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2
Current estate arrangements

Has the client made any gifts in the past seven years?

Yes

No

    Will they be leaving their estate to a spouse/civil partner?
  • Yes

    When an estate is left wholly to the spouse, the unused nil rate band is added to the surviving spouse's own nil-rate band.

    Therefore, this calculator works best if you take the combined estate of both spouses into account when completing the estate section and Gifting Log. If you haven’t done this already, please use the ‘back’ button and update.

    This calculator assumes any gifts are made jointly by both spouses and calculates estimates on that basis.

    Please note that if a gift is made by an individual the inheritance tax liability could be substantially different, even if the remaining estate is left to the spouse.

  • No, unmarried/leaving it to others

  • No, widowed

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3
Potential savings
For clients that are comfortable with the associated risks, a Business Property Relief (BPR)-qualifying investment could be an interesting alternative to gifting. Making gifts usually takes seven years to become completely free from inheritance tax. But an investment in a BPR-qualifying company can be passed down to beneficiaries free of inheritance tax after it has been held for just two years. Another benefit is that owning BPR-qualifying shares allows a client to plan for their estate while keeping their wealth in their own name.
The risks of investing in companies which qualify for BPR
Remember, BPR-qualifying investments put capital at risk, and investors may not get back the full amount they invest. Client-specific circumstances may result in different levels of inheritance tax being due and legislation may change in the future. Tax reliefs depend on the portfolio companies maintaining their qualifying status. The shares of the unlisted companies we invest in could fall or rise in value more than those listed on the main market of the London Stock Exchange, and may also be harder to sell.
See results by year
Slide the heart icon along the years to see how making this gift could save inheritance tax each year. Lifetime gifts typically become completely free from inheritance tax after seven years.


0

1 year

2 years

3 years

4 years

5 years

6 years

7 years

Gift icon
The intended gift could result in an inheritance tax saving of
£ 0
Housing icon
If a BPR-qualifying investment is made instead, this could result in an inheritance tax saving of
£ 0
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4
Inheritance tax liabilities
Use the slider to see the inheritance tax due on the estate at different points in time. The calculator shows how much inheritance tax could be payable (1) if the intended gift is made, (2) if the money was used to make a BPR-qualifying investment instead, or (3) if no estate planning is done at all. As the residence nil-rate band doesn’t apply to gifts it has not been included in this calculation.
The risks of investing in companies which qualify for BPR
Remember, BPR-qualifying investments put capital at risk, and investors may not get back the full amount they invest. Client-specific circumstances may result in different levels of inheritance tax being due and legislation may change in the future. Tax reliefs depend on the portfolio companies maintaining their qualifying status. The shares of the unlisted companies we invest in could fall or rise in value more than those listed on the main market of the London Stock Exchange, and may also be harder to sell.

0

1 year

2 years

3 years

4 years

5 years

6 years

7 years

Gift icon
If the gift is made, the estate will have an inheritance tax liability of
£ 0
Housing icon
If a BPR-qualifying investment is made instead, the inheritance tax liability will be
£ 0
Piggy bank icon
Without any estate planning, the inheritance tax liability will be
£ 0
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5
Next steps

Thank you for using our Gifting Calculator. To download the results and get a record of the Gifting Log, just fill out this form.

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Next steps

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Our Inheritance Tax Solutions are not suitable for everyone. Any recommendation should be based on a holistic review of your client’s financial situation, objectives and needs. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest.