How Inheritance Tax works. Threshold rules and allowances. Years between gift & death. 0 to 3 years 40% tax 3 to 4 years 32% tax 4 to 5 years 24% tax 5 to 6 years 16% tax 6 to 7 years 8% tax and 7 or more years 0 tax Any questions about inheritance tax? Reach out.