The classic estate planning “trap”: you give something away but still keep using it. HMRC sees straight through it.
Example: “We’ve given the house to the kids but we still live in it.” Unless you’re paying them full market rent, HMRC says: “Nice try, but it’s still yours.”
It’s not just houses — it could be a holiday cottage you “pop into when you like” or even a car you “gave away” but still drive.
Analogy: It’s like “giving away” your coat but insisting you’ll keep wearing it. On paper it’s a gift, in practice it isn’t.
Extra nuance: Paying “market rent” to make it work sounds simple — but you must actually pay it, declare it, and the kids pay tax on it. Often it causes more problems than it solves.
Practical tip: If you want to make lifetime gifts, make them properly — with no strings attached.
Call to action: Thinking of gifting? Speak to us first, so your generosity doesn’t backfire with a 40% tax bill.
Back to You are not Immortal – a practical guide to a delicate topic – IHT
