If they paid rent at the market rate when they gave away their property, they would not have retained a benefit.

If an estate is counted as being excepted, you won't have to give full details of its value, providing it meets these three criteria: An outright gift is where value is transferred to another individual without conditions. Some exceptions to this are: It's important to remember that all this really does is reduce the assets you own, and increase the debts that will count against your estate. If you don't need to access cash from your property, giving assets away earlier is likely to be better for you. How equity release schemes workWithin your will, you could arrange for assets or money up to the value of the tax-free allowance to be passed to someone other than your husband, wife or civil partner on the first death, or to be passed to a trust set up in your will from which your spouse could benefit. Otherwise it counts as a ‘gift with reservation’ and will be added to the value of your estate when you die. (A gift with reservation is where you give something away but continue to benefit from it.) on or after 6 April 2016, and they have one or more qualifying years of National Insurance contributions or credits from before 6 April 2016 (even if they do not qualify for the new State Pension)

If they continued to use the gift in the 7 years before they died, it counts as part of their estate. It does not matter when they gave it. It is taxed at the market value at the time of their death as if they still owned it. Before the current inheritance tax rules came in, it was common to use your will to make sure your tax-free allowance was not wasted. You’ll get any Additional State Pension or Graduated Retirement Benefit, based on your own contributions, on top of the increase from your spouse or civil partner. If your spouse or civil partner was born before 6 April 1950A gift can be money, property or possessions – anything that has value. A gift must reduce the value of the estate and you must include any loss incurred as part of the gift. For example, if a person sells their house to a child for less than it’s worth, the difference in value counts as a gift.

If you were to pass away within seven years of making the gift, the IHT amount may be reduced due to ' taper relief'. Gifts with reservation and pre-owned assetst are not exempt from Inheritance Tax because they are not outright gifts. Gifts with reservationYou can only get an increase if you reached State Pension age before 6 April 2016 and your spouse or civil partner reached State Pension age either: Find out more in the Pre-owned assets Inheritance Tax manual. Work out the value where fall in value relief applies