What is taper relief?
Taper relief reduces the inheritance tax payable on a failed lifetime gift where death occurs between three and seven years after it was made. It reduces the tax on the gift, not the value of the gift, and only has any effect once gifts exceed the available nil rate band.
The scale reduces the tax by 20% where death is three to four years after the gift, 40% at four to five years, 60% at five to six, and 80% at six to seven. After seven years there is no tax to relieve.
The point that catches people is the ordering. The nil rate band is applied to the gift first. If the gift is fully covered by the band, there is no tax, so taper relief has nothing to reduce — the estate saves nothing at all from the giver having survived four years.
It only produces a saving on gifts large enough to exceed the band on their own, which in practice means substantial gifts rather than ordinary ones.