22 Apr 2025
More parents are financing their children's housing deposits, according to new research.
Data published by technology company Twenty7tec showed that 110,325 buyers received at least £100,000 from a member of their family in 2024, up by 8% when compared to the year before.
Experts believe that more parents are choosing to gift their children money now in a bid to avoid high Inheritance Tax (IHT) charges in the future.
When a person dies IHT becomes due on their estate. IHT can also fall due on some lifetime gifts but most are ignored providing the donor survives for seven years after the gift.
The rate of tax on death is 40% and 20% on lifetime transfers where chargeable. Currently, the first £325,000 is chargeable to IHT at 0% and this is known as the nil rate band.
Much estate planning involves making lifetime transfers to utilise exemptions and reliefs or to benefit from a lower rate of tax on lifetime transfers.
However, careful consideration needs to be given to other factors. For example, a lifetime gift may save IHT but may alternatively create a Capital Gains Tax (CGT) liability.