A Gift Inter Vivos policy is a type of life insurance designed to cover a potential inheritance tax (IHT) liability that can arise when someone makes a large gift during their lifetime and dies within seven years. The policy pays out a lump sum to help the recipient cover any tax due.

Talk to our team of specialists at Pangea Life on 02382 354 354 or email enquiries@pangealife.co.uk to find out more and get a quote.

If you give away money or assets and die within seven years, the person who received the gift may have to pay inheritance tax. A Gift Inter Vivos policy helps protect the recipient from this potential tax bill, ensuring they are not forced to sell assets or use savings to pay the tax.

A Potentially Exempt Transfer (PET) is a lifetime gift made by one individual to another. If the donor survives seven years from the date of the gift, the transfer becomes fully exempt from inheritance tax.

If the donor dies within seven years of making the gift, the recipient of the gift is usually responsible for any inheritance tax due. A Gift Inter Vivos policy can help cover this liability.

Inheritance tax on a gift reduces over time thanks to taper relief. If the donor dies within the first three years, the full 40% tax rate may apply. After three years, the tax reduces on a sliding scale until the gift becomes fully exempt after seven years.

Typically, premiums remain fixed for the full seven-year term, even though the level of cover reduces as taper relief reduces the potential tax liability.