Inheritance tax: Britons warned of ‘strict rules’ when leaving the house to children | Personal Finance | Finance

Gifting property to children

Alternatively, the most common way to transfer property to children is through gifting it.

This is usually done to ensure they will not have to pay Inheritance Tax when they die.

Couples can combine their assets so it starts at £650,000. Parents with property over this value want their child to receive as much of it as possible.

Express.co.uk spoke exclusively with Heather Pollard at Tower Street Finance about the strict seven year rule.

She explained that as long as parents live for another seven years after they’ve gifted their property and don’t live in it or benefit from as if they were still the primary householder, their children can reduce or avoid inheritance tax.

For every passing year, up to seven years, the amount of tax tapers off.

She said: “You do not pay tax on cash gifts, but there are strict rules. While someone is still alive, they can gift as much money or items of value as they want, to anyone they want, in the form of ‘potentially exempt transfers’ (known as PETs).