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Inheritance Tax Gifting Strategies

Giving assets away during your lifetime is one of the most effective ways to reduce inheritance tax. But it only works if it’s done correctly. Get the timing, the paperwork, or the type of gift wrong, and HMRC can still treat it as part of your estate when you die, which increases the value that is subject to inheritance tax implications.

Our Private Client solicitors advise on the full range of gifting exemptions and lifetime gifting strategies, tailored to your estate and your family and in line with tax free thresholds.

We offer a completely free, no-obligation 30-minute consultation to talk through your options. Call the number below or leave your details and we’ll call you back within one business day.

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THE CHALLENGE

Why Gifting Needs a Strategy, Not Just Good Intentions

Every gift you make in your lifetime falls into one of several categories for inheritance tax purposes:

  • Exempt gifts that never count towards your estate (e.g., gifting money) - everyone has an annual gift allowance of £3,000 in the same tax year
  • Potentially exempt transfers that become fully exempt if you survive seven years - these are gifts larger than £3,000 and follow the gift and death rate
  • Gifts with reservation of benefit stay in your taxable estate for as long as you keep benefiting from them (e.g., regular monthly income from a rental property you transfer to a family member)

A common misunderstanding is assuming any gift is safe once seven years have passed. That’s only true if the gift was genuinely given away, no reservation of benefit, and no falling foul of the rules on associated operations. Getting this wrong is one of the most frequent reasons an otherwise sensible gifting plan fails when it’s tested against an estate.

tax implications when gifting property

AN EXAMPLE OF WHAT GIFTING CAN ACHIEVE IF DONE CORRECTLY

£120,000 → £0

A parent gifting £300,000 to their children more than seven years before death removes that value from their estate entirely, potentially saving £120,000 in inheritance tax at 40%, but only if the gift was structured correctly and no benefit was retained. Die within seven years, and taper relief may reduce (not remove) the tax on the gift itself, depending on the total value of gifts made.

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OUR SERVICES

Gifting Strategies We Advise On

There’s no single right way to gift to ensure your assets remain exempt from inheritance tax. Effective advice draws on a combination of exemptions and strategies, carefully selected for your estate, your family, and your goals. Our solicitors can provide advice on all aspects of gifting, but typically help clients in the following areas:

Small Gift and Annual Exemptions

Using your £3,000 annual exemption (with one year’s carry-forward), £250 small gifts, and wedding or civil partnership gift allowances every year, so nothing is left unused.

Seven Year Rule and Taper Relief

Reassessing your nil-rate band, residence nil-rate band and gifting strategy now that pensions may be pulled into the calculation, so nothing is double-counted or overlooked.

Normal Expenditure Out of Income

An often-overlooked exemption for regular gifts made from surplus income (e.g., helping with a grandchild’s school fees) without touching your capital or your seven-year clock.

Gifting the Family Home and Other Property

Understand the rules on gifts with reservation of benefit before gifting property you plan to keep living in. We also explain the capital gains tax implications.

OUR SIGNATURE SERVICE

Get an Initial Bespoke Inheritance Tax Planning Review for £495 +VAT

  • An initial fact-finding consultation with our team, covering the gifts you've already made and those you're considering making in the future
  • A comprehensive written report with clear recommendations on how to mitigate your potential inheritance tax liability
  • A one-hour consultation with a senior consultant to talk you through your options and answer questions

This service gives you a clear, actionable inheritance tax plan built around your individual circumstances, so you know exactly where you stand and what to do next. Not sure it’s right for you yet? Start with our free 30-minute consultation instead.

Get My Bespoke IHT Report

CAPITAL GAINS TAX CONSIDERATIONS

Don’t Forget Capital Gains Tax When Gifting

Capital Gains Tax can apply to the same gift you’re using for inheritance tax planning. HMRC treats a lifetime gift as a disposal at open market value, not a zero-cost transfer.

So while cash gifts are exempt from CGT, gifting assets like property, shares or a second home can trigger an immediate CGT bill if the gain exceeds your £3,000 annual exempt amount, even though the same gift is simultaneously a potentially exempt transfer for inheritance tax.

If the timing doesn’t line up, you are assessed and required to pay capital gains tax straight away (at either 18% or 24%, depending on the asset and your tax band). While inheritance tax only becomes a liability if you don’t survive seven years from the date of the gift.

Exemptions and Reliefs

Transfers between spouses and civil partners are exempt from both CGT and inheritance tax. Gifts to UK-registered charities incur neither tax either. And certain business or agricultural assets (or gifts made into specific types of trust) may qualify for CGT holdover relief, which defers the tax rather than removing it.

Because a single gift can trigger two different taxes on two different timelines, we check the Capital Gains Tax position alongside the inheritance tax position before recommending any gifting strategy, so you’re not caught out by one while planning around the other.

HOW IT WORKS

Our Process

STEP 1

Fact-finding Consultation

We discuss your estate, the gifts you’ve made or are considering, and your goals. No obligation, no charge.

STEP 2

Estate and Asset Review

We assess your full inheritance tax exposure and identify which gifting exemptions and strategies are available to you.

STEP 3

Tailored Strategy

We recommend a bespoke gifting plan, written in plain English, that’s structured correctly from the outset.

STEP 4

Implementation

We prepare the paperwork. Deeds of gift, trust documentation, and records for your executors, and can review your plan as your circumstances change.

Thinking of Gifting a Property or a Business Asset?

Property, business and agricultural assets carry their own rules and reliefs alongside general gifting exemptions. We’ll make sure your whole estate plan works together.

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WHY JONES WHYTE

Dual Qualified, Specialists in IHT Planning

Choosing the right firm is crucial to securing your family’s future and minimising tax liability. Experience with complex estates is crucial for solicitors handling inheritance tax planning. That’s exactly what you get with Jones Whyte. 

  • Experts in tax law - our expert advisers will keep you up to date on available tax reliefs and the most tax efficient strategies to protect your family's financial future.
  • Our Estate Planning team are dual qualified, meaning they are able to advise clients with assets all over the UK, not just Scotland.
  • Comprehensive estate planning - we provide the full range of estate planning services meaning you can manage your assets under one roof.
  • Transparent pricing - no hidden fees & hourly rates.

What Our Clients Say

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Inheritance Tax and Pensions FAQs

The annual allowance is £3,000. You can gift tax free of £3,000 per tax year (with one year's unused allowance carried forward), plus £250 to any number of other people, plus wedding or civil partnership gifts. Larger gifts can also become fully exempt if you survive seven years from the date of the gift.

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