Can I Sell My House and Give the Money to My Son? UK Guide

Written by Dan Green, Home Selling Expert. Last updated 10 August 2026. Figures are for the 2026/27 UK tax year.

Yes. The proceeds are yours once the sale completes, and there is no gift tax in the UK. But the gift stays in your estate for inheritance tax for seven years, and councils can count it against care fees indefinitely.

Can I sell my house and give the money to my son?

Yes. Once your sale completes and the proceeds land in your account, the money is legally yours to do what you like with, and there is no limit on how much you can hand over. Nobody needs to approve it and there is no gift tax in the UK.

The complication is what happens afterwards. HM Revenue & Customs treats an outright gift of cash to your child as a potentially exempt transfer (PET). A PET only becomes fully exempt from inheritance tax once you have survived seven years from the date you made it. Die inside that window and the gift is added back to your estate and taxed before anything else.

Two other bodies also take an interest. A local authority assessing you for care costs can look at the gift under the deprivation of assets rules, and the Department for Work and Pensions can treat it as notional capital for means-tested benefits. Both are covered below.

How much money can I give my son tax free in the UK?

Several exemptions let you give money away with no seven-year wait at all. They are modest, but they stack, and they apply per person — so a married couple can double every figure in this table.

Anything above these limits is a potentially exempt transfer and starts the seven-year clock. There is no penalty for exceeding them — you simply have to survive seven years for the gift to fall out of your estate.

What is the seven-year rule, and how does taper relief work?

If you die within seven years of making a gift, that gift is added back into your estate. It uses up your £325,000 nil-rate band first, before anything else you own. Taper relief then reduces the tax due — but only on the portion of gifts that exceeds the nil-rate band.

Could gifting the money actually increase my inheritance tax bill?

Yes, and this is the point most guides miss entirely. It depends on whether you gift the cash after a sale or gift the house itself.

On top of the £325,000 nil-rate band there is a residence nil-rate band of £175,000. It is only available where you own a home at death and leave it to direct descendants — children, stepchildren, adopted children or grandchildren. Together that is £500,000 per person, or up to £1 million for a married couple whose wills are drafted correctly.

Transfer the house into your son’s name during your lifetime and you generally no longer own a qualifying residence at death, so the residence nil-rate band is lost. At 40% that is up to £70,000 of extra tax per person. The downsizing addition can preserve it in some cases, but the rules are narrow and worth taking advice on.

Can I sell my house to my son for £1 instead?

Yes, it is perfectly legal — but it does not do what most people hope. HMRC applies the connected persons rule: a transfer between close relatives is treated as taking place at full open-market value regardless of what actually changes hands. Selling for £1 is a gift of the whole house, dressed up as a sale.

Here is what each tax actually does in that scenario.

England and Northern Ireland charge SDLT with a nil-rate threshold of £125,000. Wales charges Land Transaction Tax and Scotland charges Land and Buildings Transaction Tax instead, with different thresholds and their own surcharges.

A worked stamp duty example

Say you transfer a house worth £300,000 to your son for £1, and he takes over your outstanding £150,000 mortgage. The £1 is irrelevant; the chargeable consideration is £150,000. He pays nothing on the first £125,000 and 2% on the remaining £25,000 — £500. If he already owns another property, the 5% surcharge adds £7,500 on the full £150,000, taking the bill to £8,000.

What if I want to keep living in the house?

This is where a £1 sale most often fails. If you give your home away but carry on living in it rent-free, HMRC treats it as a gift with reservation of benefit. The house stays in your estate for inheritance tax no matter how many years pass — the seven-year clock never really starts. You get the legal downsides of giving it away with none of the tax benefit.

The recognised way out is to pay your son a full market rent, reviewed regularly and evidenced in writing. HMRC does ask for proof. That rent is then taxable income in his hands, which often cancels out the saving.

If you do stay on, protect your position formally. A declaration of trust, a lease, or a restriction entered on the title at HM Land Registry all give you a right to occupy that survives a fallout, a divorce or a bankruptcy. A verbal family understanding does not.

Will giving the money away protect me from care home fees?

No, and the seven-year rule people quote here does not exist. Inheritance tax has a seven-year rule; care funding does not. Under the Care Act 2014 and the accompanying charging guidance, a council can look back over your finances with no time limit whatsoever.

The test is whether avoiding care charges was a significant motivation for the gift — not the only reason, or even the main one. If the council decides it was, it treats you as still owning the money as notional capital and charges you accordingly. It can also pursue the person who received the gift.

Both limits have been frozen since April 2010. Wales, Scotland and Northern Ireland set their own thresholds. Gifting because you genuinely want to help your son buy a home, years before any health problem, is a very different case from gifting shortly after a diagnosis — and the timing and your health at the time are exactly what a council will look at.

What else can go wrong?

Your son’s circumstances become your problem

Once the money or the house is his, it is exposed to his life. A divorce can put it into a matrimonial settlement. Creditors or a bankruptcy trustee can reach it. If he dies before you, it passes under his will — which may leave the family home with a son-in-law or daughter-in-law rather than your other children.

Your own creditors can unwind it

Under the Insolvency Act 1986, a trustee in bankruptcy can challenge a transaction at undervalue made in the five years before bankruptcy. A separate provision covering transactions intended to put assets beyond the reach of creditors has no time limit at all. Never gift sale proceeds while you have unresolved debts.

Means-tested benefits

Universal Credit and Pension Credit apply their own notional capital rules. Giving money away to qualify for, or increase, a means-tested benefit can be treated as deliberate deprivation, with the capital still counted as yours.

Your son loses first-time buyer status

If he owns any property — including one you transferred to him for £1 — he can no longer claim first-time buyer stamp duty relief on a later purchase.

No capital gains uplift

Gift an asset and your son inherits your original base cost, so his eventual gain is measured from what you paid. Assets passing on death are rebased to their value at that date, wiping out the accumulated gain. For a second home held a long time, doing nothing can beat gifting.

Gift the house, or sell it and gift the cash?

For most families this is the real decision. Selling on the open market and gifting the proceeds is usually cleaner, more flexible and easier to split between children.

Whichever route you pick, speed matters if your son is relying on the money for a purchase. Roughly one in four UK house sales agreed on the open market falls through before completion, and a collapsed chain can leave a gift promised and undeliverable.

How to do it properly

1. Get the house valued independently. Every tax here is calculated on market value, so you need a defensible figure from the outset.
2. Deal with the mortgage. Lenders will rarely consent to a transfer at undervalue. In most cases the loan has to be redeemed first — check for early repayment charges.
3. Use separate solicitors. If you are transferring rather than selling, you and your son need independent legal advice. A single conveyancer acting for both sides is a conflict of interest, and independent advice is your best evidence against a later claim of undue influence.
4. Write the gift down. A short deed of gift or letter recording the date, the amount and your reasons is what your executors will rely on, and what a council will ask to see.
5. Report capital gains within 60 days. If CGT is due on a UK residential property, it must be reported and paid within 60 days of completion. Penalties apply after that.
6. Tell your executors. Gifts in the seven years before death must be declared on the inheritance tax return. Undeclared gifts are the most common cause of penalties.
7. Think about the other children. A disproportionate gift to one child can trigger a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Record your reasoning.

Selling the house first

If you decide to sell and gift the proceeds, the route you choose affects both how much you end up with and how certain the timing is. An estate agent sale typically achieves the highest headline price but takes months and can fall through. A genuine cash buyer completes faster and with more certainty, usually at a discount to market value.

Springbok Properties is regulated by The Property Ombudsman and is a member of the National Association of Property Buyers. Our guides on what you will make from your sale and how long a sale takes once an offer is accepted set out the realistic numbers and timescales.

Related guides

• Can I sell my house for £1 to a family member?
• Selling property to family below market value
• What happens when you inherit a house from your parents?
• Can you avoid selling your home to pay for care?
• Do you pay tax when you sell a house in the UK?

Frequently asked questions