UKCan I give away my house before death to avoid inheritance tax?
Yes, you can give away your house before death, but it may still be subject to inheritance tax if you continue to benefit from it or die within seven years — and gifts with reservation of benefit are treated as still owned by you.
What the Law Says
UK inheritance tax law treats certain lifetime gifts — especially those where the donor keeps using the asset — as if they were never given away. Section 102 of the Inheritance Tax Act 1984 is central to this.
If you give away your house but continue to live in it rent-free (or pay below market rent), HMRC considers this a 'gift with reservation of benefit'. Under the law, such a gift is ignored for inheritance tax purposes — meaning the property remains part of your estate when you die.
This applies even if the legal ownership has changed. The key question is whether you retained any benefit from the property after the transfer. If so, the house is fully included in your estate for inheritance tax calculation — regardless of when you die.
Other lifetime gifts (not involving reservation) are potentially exempt transfers (PETs). These only fall outside your estate if you survive for at least seven years after making the gift. If you die within seven years, taper relief may reduce the tax, but the gift remains taxable.
Statutory TextWhere a person makes a gift and retains some benefit in respect of the property which was the subject of the gift, the gift shall be treated for the purposes of this Act as not having been made.
— Inheritance Tax Act 1984, s. 102 — Gifts with reservation of benefit
What to Do
Do not continue living in the house rent-free after gifting it — if you do, s. 102 will likely apply.
If you wish to stay, pay full market rent under a formal, documented agreement — and keep records of payments.
Consider waiting at least seven years after a clean, arms-length gift before dying — to make it a fully exempt PET.
Seek professional advice from a tax specialist or solicitor before transferring property — HMRC scrutinises these arrangements closely.
Remember: giving away your home may affect your eligibility for state support (e.g., care home fees) under local authority financial assessments.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.