Gifting property to children: where do I stand?

When people decide whether to gift their property to their children, they are usually doing it to avoid being taxed. This is because when someone gifts their property to a spouse, civil partner, or a charity, they are not subject to Inheritance Tax. 

In fact, there are rules that you should be aware of when considering whether to gift property to your children. Ultimately, it is down to your personal circumstances as to whether it will be beneficial to you and your family. 

How does Inheritance Tax work when gifting property?

In certain circumstances, Inheritance Tax is not due on gifts including property: 

- When the property is worth less than £325,000
- If you have gifted the property in the 7 years before your death


Gifts are taxed in the following ways in the UK:

- Gifts that are given in the 3 years before your death are taxed at 40%
- Gifts that are given in the 3-4 years before your death are taxed at 32%
- Gifts that are given in the 4-5 years before your death are taxed at 24%
- Gifts that are given in the 5-6 years before your death are taxed at 16%
- Gifts that are given in the 6-7 years before your death are taxed at 8%


*GloverPriest is not financially regulated, this information has been taken directly from https://www.gov.uk/inheritance-tax/gifts
For further details on Tax Planning, we recommend you speak to an independent financial advisor*
What are the advantages of gifting property to your children?

If you gift your property to your children, then you can avoid having to pay Inheritance Tax in some circumstances (mentioned above). But you must be aware that if you put that same property in your Will (instead of gifting it), then it will count towards the value of your estate and will therefore be taxable. 

If you gift property before you die, this will subsequently reduce your Inheritance Tax exposure on other assets. 

There are other advantages of passing on your property such as having the peace of mind that your house is going to the person/people you want it to go to. Life is unpredictable and making these decisions now, means that you are in control of what happens to your assets. 

Additionally, giving such a significant gift to your children can be highly beneficial to them especially as they can use the property to live in or for rental income. 

What are the disadvantages of gifting property to children?

An obvious disadvantage is if you gift your home and want to continue living in it afterwards, you will need to pay rent to the new owner of the house at the market rental value. In addition, you will need to pay bills and live there for at least 7 years. If not, the property will be subject to Inheritance Tax.

Also, if you gift the property and then sadly die within 7 years, the property will be subject to Inheritance Tax.

If you are unsure whether you should gift your property to your children, you should seek legal advice first.


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At GloverPriest, we understand navigating the law can be a difficult task to take on alone. That’s why we created this comprehensive guide to help promote information for everyone to use.

If you’re looking to speak to a solicitor, please call us from the number below. Alternatively, you can fill out our online form and we’ll be right with you.

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