Yes, you can put your house in your children’s name, but it will only fall outside your estate for Inheritance Tax if you survive for seven years after the gift and you no longer live there rent-free. If you carry on living in the house without paying a full market rent, HMRC will still treat it as yours (known as a “gift with reservation of benefit”). Gifting your home can also lead to Capital Gains Tax and carries other risks, so it is important to take advice before you act.
If you’re considering gifting property to your children, or if you’re inheriting a house from your parents, then it’s reasonable to want to ensure that the transfer of property is done in as tax-friendly a way as possible.
Many people, understandably, consider whether it would be possible to put their house in their child’s name in order to avoid paying inheritance tax. This is a viable option in only a few circumstances, and there are strict guidelines as to how much you can gift your child and the nature of the gift itself.
If you want to avoid overpaying inheritance tax on the property, then you should consider all of the options available to you and your family, and our Wills and Inheritance Tax Planning Solicitors and Lawyers can review your estate portfolio and make sure it is organised advantageously to minimise or avoid the tax on gifts from parents.
If you’d like more specialist advice suited to your circumstances, you can speak to one of our solicitors and specialist lawyers in Ashford, Cranbrook and Hythe.
Please be aware that this blog is for informative purposes only and should not be taken as legal advice.
How much can you gift your children?
Whilst there is no definitive maximum amount that you can gift to your children, there are only a certain number of ways that you can give these gifts without it counting towards Inheritance Tax (IHT), known as exempt gifts or exemptions. There are five main options for you to do this, these being:
- Annual exemption, which allows you to give away up to £3,000 each tax year to your child or children in total. If you did not use it in the previous tax year, you can carry it forward for one year, giving up to £6,000.
- Wedding or civil partnership gifts, which allow you to give £5,000 to a child, £2,500 to a grandchild or great-grandchild and £1,000 to anyone else.
- Regular gifts out of income, which must be made from surplus income and cannot affect your standard of living. HMRC may request evidence of this, so you will need to keep documentation of any relevant transactions.
- Small gifts exemption, which allows you to give up to £250 to an unlimited number of people each tax year so long as they don’t also benefit from your annual exemption.
- Potentially Exempt Transfers (PETs), which are gifts that are of higher value than the above exemptions. These become completely free of Inheritance Tax if you survive for seven years after making the gift and do not keep any benefit from the gifted asset.
Can I gift my house to my children?
Yes, if you own your home you are able to gift it to your children. If there is still a mortgage, you will need your lender’s agreement, and Stamp Duty Land Tax may be payable if your children take over the mortgage debt. While gifting property to your children can be a useful way of reducing Inheritance Tax, it is important that the exchange is structured in the correct way.
Firstly, you’ll need to bear in mind that there is a seven-year rule in place, which means that if you gift the house to your children, the gift will only be exempt from Inheritance Tax if you survive seven years from the date of the gift. If you die before this seven-year limit, your property may still be subject to Inheritance Tax, although “taper relief” can reduce the tax due on the gift if you die between three and seven years after making it and the gift is worth more than the nil-rate band.
Secondly, after gifting the house, if you continue to live in it or gain any benefits from it, then HMRC will determine that it still counts towards your estate as it is considered to be a “gift with reservation of benefit”. HMRC will not recognise a gift with a reservation of benefit for Inheritance Tax purposes, meaning that the property would be included in the estate when calculating the Inheritance Tax bill.
You can avoid this by paying a full market-rate rent to your children (which they may need to pay Income Tax on) and paying your share of the household bills. The transfer of ownership must also be properly registered at HM Land Registry.
What are the risks of putting your house in your children’s name?
Gifting your home can save Inheritance Tax, but it also means giving up legal ownership of the place you live. Before going ahead, it is worth thinking about the following risks:
- Loss of security: once the house belongs to your children, you have no legal right to stay there if relationships break down.
- Your children’s circumstances: if a child divorces, becomes bankrupt or dies, the house could form part of a divorce settlement, be claimed by their creditors or pass under their Will.
- Capital Gains Tax: if your children do not live in the house as their main home, they may have to pay Capital Gains Tax on any rise in value when they sell it. You may also have to pay Capital Gains Tax if you give away a property that is not your main home.
- Care home fees: if you later need care, the local authority may treat the gift as a “deliberate deprivation of assets” and assess you as if you still owned the house.
How to leave your house to your child
You have three options for how you’d prefer to leave your house to your children, these being as a gift, in the Will, or as part of a trust. If your priority is avoiding excess inheritance tax or IHT altogether, then gifting your house is often the best choice. This is especially true if the property is valued above £500,000 (including the residence nil-rate band) as it would otherwise exceed the inheritance tax threshold for a single person (up to £1 million for a married couple or civil partners).
Can my children inherit my house tax-free?
If you are passing your estate to a direct descendant such as your children or grandchildren, then you can benefit from both the Nil-Rate Band (NRB) that has a threshold of £325,000, as well as an additional Residence Nil-Rate Band (RNRB), which gives you an additional £175,000. These two combine to mean that you can pass a total of £500,000 tax-free onto your children, assuming you meet the RNRB criteria. Married couples and civil partners can pass any unused allowances to each other, so together they may be able to pass on up to £1 million. The RNRB is gradually reduced for estates worth more than £2 million.
As discussed above, you can also potentially reduce Inheritance Tax by gifting it to your child during your lifetime, which could help you avoid IHT if you continue living for seven years after the gift and follow the “Potentially Exempt Transfer” rule.
Implications on Inheritance Tax following the Autumn 2024 and 2025 Budgets
The Autumn 2024 Budget made significant changes to the UK Inheritance Tax (IHT) rules, including a longer freeze on the Nil-Rate Band, reforms to Agricultural and Business Property Reliefs and bringing pensions into Inheritance Tax. Some of these were then changed again in the Autumn 2025 Budget and in December 2025.
Firstly, the Nil-Rate Band (£325,000) and Residence Nil-Rate Band (£175,000) will stay the same until at least April 2031, meaning that an estate worth up to £325,000 can still be inherited tax-free (or more where the RNRB or a spouse’s unused allowance applies). This could be one way for you to leave your house to your children without incurring an Inheritance Tax bill.
Secondly, there are reforms to the agricultural and business property reliefs, which have affected you from the 6th of April 2026 if you own farmland or business assets. If these assets fall under the threshold of £2.5 million in combined value, then they still enjoy 100% Inheritance Tax relief. Any unused allowance can be passed to a surviving spouse or civil partner, so a couple may be able to pass on up to £5 million of qualifying assets with full relief.
However, if they exceed the threshold, the relief drops to 50% on the value above it. Furthermore, the government has also reduced the rate of business property relief available from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of recognised stock exchanges, such as many AIM shares.
Thirdly, from 6 April 2027 most unused pension funds and pension death benefits will be included in your estate for Inheritance Tax. This could push some estates over the threshold, so it is worth reviewing your plans now.
We have detailed the impact of the 2024 Autumn budget on Inheritance Tax in the following article. The 2026 Autumn budget did not impinge on the existing rules.
Speak to our Wills and Inheritance Tax solicitors and lawyers today
It’s understandable to want to protect your wealth portfolio in all its forms, especially if your home is sentimental or tied to an agricultural or commercial venture. There are ways of gifting property to children that are more tax-friendly than others, so make sure that you are transferring the ownership of property from parent to child in an advantageous way.
We take great measures to be communicative and approachable to our elderly clients with a dedicated team of Wills, Probate, and Powers of Attorney Solicitors and specialist Lawyers for Older Clients, offering them the dedication that they deserve but sometimes do not receive.
If you’d like more specialist advice suited to your circumstances, you can speak to one of our solicitors or Lawyers in Ashford, Cranbrook and Hythe.