Inheritance Tax currently stands at a rate of 40 percent, and it's usually not payable on the value of a person’s estate below a set threshold. For most Britons, the threshold currently stands at £325,000, and for any estate which exceeds this value, the proportion above this amount would be taxed. The tax, often described as Britain’s ‘most hated’, is something many families will think about, even before the death of their loved one.

Gifts to individuals that are not immediately considered as tax free are known as ‘potentially exempt transfers’, meaning they will only be tax-free if a person survives for at least seven years after making the gift.

This is known as the seven-year rule and prevents people from dodging the tax, which puts billions into government coffers every year.

If a person does pass away within seven years of the gift being given, it will be subject to Inheritance Tax.

The government considers a gift as anything that has a value, such as money, property or possessions.

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It also states a gift is a loss in value when something is transferred, for example selling a house to a child for less than it is worth means the difference in value counts as a gift.

Gifts which are made three to seven years before death are taxed on a scale known as 'taper relief’.

For gifts given less than three years before death, Inheritance Tax stands at 40 percent.

However, for three to four years before death, the tax stands at 32 percent, reducing to 24 percent between four to five years, and 16 percent from five to six years.

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