Call Us :  0333 4141920  | Email: admin@nashharvey.com 


IHT – Giving away your home before you die
23/11/2023

The majority of gifts made during a person's life, including gifting a home, are not subject to tax at the time of the gift. These lifetime transfers are known as 'potentially exempt transfers' or 'PETs'. These gifts or transfers achieve their potential of becoming exempt from Inheritance Tax (IHT) if the taxpayer survives for more than seven years after making the gift. There is a tapered relief available if the donor dies between three and seven years after the gift is made.

HMRC’s guidance suggests that if the person gifting the home wants to continue living in the property after giving it away, they need to:

  • pay rent to the new owner at the going rate (for similar local rental properties);
  • pay their share of the bills; and
  • live there for at least 7 years.

However, the rules are different if the person making the gift retains some 'enjoyment' of the gift made. This could apply if a person gave their home to their children but continued to live in the home rent-free. Under these circumstances, the taxman would contend that the gift falls under the heading of a gift with reservation of benefit and the 'gift' would remain subject to IHT even if the taxpayer dies more than 7 years after the transfer.


Maidstone Office


The Granary, Hermitage Court Hermitage Lane
Maidstone
ME16 9NT
 
 
 
This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel: 0333 4141920

London Office


Studio 1
305a Goldhawk Road
London Office
W12 8EU
 
 

This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel: 020 8746 3708

Ashford Office

 
Suite 13 Letraset Building
Wotton Lane  Ashford
Kent
TN23 6FL
 
 

This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel: 0333 4141920

Membership

Nash Harvey Group LLP is a limited liability partnership registered in England
Reg No: OC376161 | VAT Number: 137 7621 01
Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales.