It depends. Just to add a bit of detail to the above reply.
If you make regular gifts out your income to a person (say, you give your children £10k per year out of your income - but it must be income, not from your savings) then that is totally excluded from inheritance tax (IHT) considerations.
This is often referred to as 'normal expenditure out of income'.
So, if you do it regularly for a number of years and the money is coming from your income, and it doesn't lower your usual standard of living, then you can gift as much as you like - it's your money to do with as you see fit.
So, for example, giving 10% (or whatever amount) of your income to your children every year is fine. But giving them 10% of your savings every year would be a very different matter.
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The next point to consider is if there is any tax to pay anyway. The first £325,000 of gifts within seven years of death will be exempt as they will fall under the Nil Rate Band (NRB). So, as a result, any gifts will reduce the amount of the NRB left at the time of death meaning that more of the estate will be liable to IHT.
When it comes to paying IHT on any lifetime gifts, that depends on what other gifts have also been given within the seven year period (and potentially up to 14 years if there is also a chargeable lifetime transfer, eg a large gift is put into a trust).
It's probably easiest to explain with an example.
Take your long-lost divorced aunt. She dies in 2026 but in the seven years previous to that she gave various gifts to her nephews/nieces:-
• 2019 A gets 100,000
• 2020 B gets 100,000
• 2021 C gets 100,000
• 2022 D gets 100,000
• 2023 E gets 100,000
Now, the first £325,000 is exempt so A, B and C don't have to pay any tax.
Since A, B and C have used up £300,000 between them, D only gets £25,000 tax free and has to pay tax on the remaining £75,000. But, because it is between 3 and 4 years ago they pay a reduced rate of 32%.
Poor old E, being the last to the party has to pay tax on their full £100,000 gift.
Since all of the NRB has been used up in gifts then there is none left to be used for the rest of your aunt's estate (eg her house etc) and so IHT will have to be paid on the full value of her estate (unless she is leaving the house to a child etc).
Hope that makes sense?
The recipient of a gift is primarily responsible for paying the tax. It is only if the tax isn't paid within 12 months of death that the estate of the deceased also becomes jointly liable - HMRC make sure they get their money one way or another.
So, if D and E refuse to pay the tax (which they might do) then at the end of the day, it is the estate of the deceased that is responsible for paying the tax and would have to pay it.
It would then be open for the executors of the will to sue the person that got the gift but refused to pay the tax.
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"And, who checks - HMRC or executors?"
It is the duty of the executors to make all necessary enquiries and if the person who got the gift doesn't tell the executors then they may face a fine. Although HMRC will wade in if they get a tip-off.
There was a case back in 2015, Hutchings v Revenue & Customs [2015] UKFTT 9 (TC).
Mr Hutchings died in 2009 and his executors wrote to each member of the family asking if they had received any gifts from him in the previous 7 years. Only one daughter replied saying that she was not aware of anything.
The executors filed the inheritance tax account on that basis and arranged for the inheritance tax to be paid. Nearly two years later, HMRC received a tip-off that one of the sons had received a substantial cash gift from Mr Hutchings.
HMRC wrote to the son demanding disclosure of the gift. It turned out that the gift was about £450,000 cash held in an offshore bank account. HMRC claimed an additional £47,000 of tax from the son personally, and, in addition, claimed a penalty from him of £87,000.
The son paid the tax but appealed against the penalty. Amongst other things he claimed that his father's executors had not made it clear to him that he should declare the gift and that they should, as a result, be liable to pay the tax themselves. The Court found against the son, saying that he had deliberately withheld information about the gift from his father's executors.