{"id":7395,"date":"2025-07-04T12:26:55","date_gmt":"2025-07-04T11:26:55","guid":{"rendered":"https:\/\/cloud9accountingteam.co.uk\/?p=7395"},"modified":"2025-07-04T12:28:35","modified_gmt":"2025-07-04T11:28:35","slug":"gifting-assets-to","status":"publish","type":"post","link":"https:\/\/cloud9accountingteam.co.uk\/sk\/gifting-assets-to\/","title":{"rendered":"\ud83c\udfe1 Gifting Assets to Children to Reduce Inheritance Tax: What You Need to Know"},"content":{"rendered":"

Passing wealth to your children is a goal for many families \u2014 and when done right, it can significantly reduce the burden of Inheritance Tax (IHT). But while gifting assets may sound simple, the tax implications can be complex, especially when Capital Gains Tax (CGT) comes into play.<\/p>\n

Let\u2019s break it down \ud83d\udc47<\/p>\n

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\ud83d\udcc6 The 7-Year Rule: Timing is Everything<\/strong><\/h3>\n

When you gift an asset to a child outright (not into a trust), it is considered a Potentially Exempt Transfer (PET)<\/strong>. If you survive seven years<\/strong> after making the gift, the value is excluded from your estate for IHT purposes.<\/p>\n

However, if you pass away within seven years, the gift is brought back into your estate and could be subject to IHT. Taper relief may reduce this liability if you survive at least three years \u2014 but earlier gifts use up your nil-rate band first.<\/p>\n

\ud83d\udd11 Key takeaway:<\/em> The sooner you gift, the more likely the asset will fall out of your estate. But be careful: you must not continue to benefit from the asset, or the gift may be disqualified under the \u201cgift with reservation\u201d<\/strong> rules.<\/p>\n

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\ud83c\udfd8 Capital Gains Tax (CGT) on Gifts<\/strong><\/h3>\n

Unlike IHT, CGT is triggered immediately<\/strong> when gifting an appreciated asset such as a rental property. HMRC treats this as if you\u2019ve sold the asset at market value \u2014 even if no money changed hands.<\/p>\n

Current CGT rates for residential property (2025\/26):<\/p>\n