Thinking about giving your children their inheritance early? Or wondering if you can access yours before probate completes? Early inheritance can be a generous way to support your loved ones, whether that’s helping a child buy their first home, contributing towards university fees, or just helping to ease some financial pressure.

But before giving or receiving an early inheritance in the UK, it’s important to understand the tax rules, what it means for your finances and the best time to gift that money early.

What is an early inheritance?

An early inheritance, sometimes known as a living inheritance or early inheritance gift, is when you give money or assets to your loved ones while you’re still alive, rather than leaving it in your will.

Many people choose to do this because they want to help children get onto the property ladder or fund education when finances are tight. The good news is that giving an inheritance early can also have tax advantages.

Can I give my children their inheritance early?

Yes, you can. You are free to gift your money or assets while you’re alive, but it’s important to also understand how Inheritance Tax (IHT) applies.

Under current UK laws, you can:

• Gift up to £3,000 each tax year without affecting your estate’s Inheritance Tax threshold (this is known as your annual exemption).
• Carry forward any unused allowance from the previous year, allowing you to gift up to £6,000.
• Give small gifts of up to £250 per person each year, tax-free.
• Make wedding or civil partnership gifts, such as £5,000 to a child or £2,500 to a grandchild.
• Make regular gifts from your income, provided they don’t affect your standard of living.

These gifts are not counted towards IHT at all. If you want to give any bigger gifts, they may still be exempt, but only if you live for seven years after giving them. This is known as the seven-year rule.

The Seven-Year Rule Explained

Under current UK rules, if you gift more than your annual allowance, the gift is classed as a Potentially Exempt Transfer (PET).

If you live seven years or more after gifting it, it will be completely free from Inheritance Tax. If you pass away sooner, the amount may still be taxed depending on when the gift was made. This is known as taper relief, and it works like this:

So, the earlier you give an inheritance, the less likely it is that your loved ones will face a tax bill later.

Is early inheritance taxable?

The short answer is: it can be.

While giving an early inheritance in the UK can help reduce IHT in the long term, gifts made within seven years of your death could still be taxed if your total estate (including those gifts) is above the £325,000 nil-rate band, or £650,000 for couples.

But Inheritance Taxes aside, some gifts may also trigger Capital Gains Tax if you transfer assets that have increased in value, like property, shares, or artwork.

Because it can be complicated, it’s a good idea to speak to a professional so you can get the right advice for your situation. 

When should you give inheritance money if you want to gift it early?

There’s no “right time” to give early inheritance money, but there are a few important things to think about if you are planning to.

Your own financial security: Make sure you’ll still have enough to cover retirement, care and emergency costs.

Tax efficiency: The sooner you give, the better your chances of avoiding IHT.

Record keeping: Keep written records of what you’ve given, when, and to whom. This helps your executors later.

If you’re wondering “When should I give my child inheritance money?”, the answer will depend on both your financial position and theirs. Early gifting can be a very generous way to support your child financially or help them secure a home, but it’s not always tax-exempt.

When early inheritance can lead to unexpected costs

Gifting an inheritance early definitely has its benefits, but it’s also worth understanding what happens if things don’t go to plan.

If someone gives a generous early inheritance gift and then passes away within seven years, that gift might still be counted towards the estate for IHT purposes.

Here’s how it works:

If the total value of gifts is within the £325,000 nil-rate band, then no Inheritance Tax is due at all. Everything under that threshold is tax-free, and neither the estate nor the recipients has to pay anything.

If the total value of gifts is above £325,000, then the estate normally pays the IHT that becomes due on those gifts. This is handled by the executors during probate, before the rest of the estate is distributed.

If the total gifts exceed £325,000 and the estate cannot cover the tax, then the recipient of the gift (the person who received the money or asset) becomes liable to pay the IHT on their portion.

This can be very stressful at an already difficult time, especially if the money from an early inheritance has already been spent and the remainder is delayed due to probate.

How Provira Can Help

Provira’s Inheritance Advance exists exactly for situations like this.

If you’re a beneficiary needing some cash to cover Inheritance Tax tied to an early inheritance gift, but are waiting for the rest of your inheritance to come through, Provira can help you access up to 50% of your future inheritance early, often within days.

This can be especially useful if you have your future inheritance tied up in assets like a home that needs to be sold, but is delayed by processes like probate.

With a Provira Inheritance Advance, there are:

• No credit checks or personal guarantees, as repayment comes from your future inheritance.
• Quick approval and release of funds, often within days.
• Transparent fees, around 2%.

Speak to the team and apply for an Inheritance Advance today.

Should you gift an inheritance early?

Early inheritance can be a good idea, as long as you go into it with the right information.

Advantages

• You get to see loved ones enjoy your gift.
• It may help reduce future IHT liabilities.
• You can support family when it matters most, like buying a home or starting a family.

Considerations

• You must make sure it won’t impact your retirement or care needs.
• Gifts made within seven years could still be taxable.
• Your beneficiaries might face a tax bill if the estate can’t pay the Inheritance Tax.

Receiving an early inheritance

If you’ve been given an early inheritance to buy a house or fund a big life milestone, it’s important to keep clear records and understand what it might mean if your benefactor passes away within seven years.

You may not be directly responsible for paying tax in most cases, but if the estate can’t pay, then it may fall to you. 

In these cases, Provira’s Inheritance Advance can help beneficiaries access funds quickly to manage expenses or pay IHT due before the estate settles.

Need to cover inheritance costs before probate?

If you’re waiting for your inheritance to come through, but are facing tax or legal costs from an early gift, Provira can help.

Access up to 50% of your future inheritance within days with our quick, transparent Inheritance Advance service. No credit checks, no personal guarantees, just the funds you need, when you need them most.

Apply online with Provira today.