Gifting a deposit to your children or grandchildren.

First: can you afford it?

Before the how, the whether. Work out what downsizing will release after costs (calculator), then what you need to keep: an emergency fund, money for the things you want to do, and enough to pay for care for a few years if it came to it. What is left is what you can give. Advisers see a lot of parents who gave too much too early and were quietly short for the rest of their lives. Nobody's children want that.

What the lender needs

Almost all lenders accept gifted deposits from parents and grandparents (siblings, aunts and uncles usually; friends rarely). They will want:

• A gift letter, signed by you, saying: who you are and your relationship to the buyer; the amount; that it is a gift, not a loan, and will never have to be repaid; that you will have no interest in or rights over the property; and that you are solvent. Some lenders have their own form; the broker will tell you.
• Proof of where the money came from. A bank statement showing it, and, because the sum will have appeared from a house sale, the completion statement from your solicitor. This is anti-money-laundering, not suspicion.
• Your photo ID and proof of address. The buyer's solicitor needs this too.

Our sister site, Help First Time Buyers, explains the buyer's side, including the documents their lender will ask them for. Send them the link.

Is there tax on the gift?

For the person receiving it: no. There is no tax on receiving a gift in the UK.

For you: not now, and usually never. A gift to an individual is a "potentially exempt transfer". If you live seven years after making it, it is outside your estate for inheritance tax completely. If you die within seven years, it is added back into your estate and uses up your tax-free allowance first. Only if your total gifts in the seven years before death exceed the £325,000 nil-rate band does tax fall on the gift itself, and then taper relief reduces it for gifts made three to seven years before death.

Some gifts are exempt straight away, whatever happens:

• £3,000 a year in total, and you can carry forward one unused year, so a couple who have not used last year's could give £12,000 between them at once.
• Wedding or civil partnership gifts: £5,000 from a parent, £2,500 from a grandparent, £1,000 from anyone else.
• Small gifts of up to £250 per person per year.
• Regular gifts out of surplus income that do not reduce your standard of living. Keep records; this one is valuable and under-used.

Try the gift and inheritance tax calculator for a rough look at your own figures. For most families with an estate under the allowances there is no inheritance tax to think about either way.

The care-costs question

If you later need council help with care and the council believes you gave money away to avoid paying for it, it can treat you as if you still had it. This is "deliberate deprivation of assets", and there is no time limit. The test is intention at the time: a gift made when you were well, for a clear family reason, long before any care need, is very unlikely to be caught. A large gift made after a diagnosis, or after a social worker has been round, is a different matter. Keep a note of why you gave, and when. Care costs.

Keeping it fair

Families fall out over deposits more than over wills. Three things help:

1. Decide the rule and tell everyone. Equal amounts at the same time, or the same amount to each child when they need it, or gifts now balanced by the will later. Any rule works if it is known.
2. Write it down. A one-page note, dated and signed, of what was given to whom and why, kept with the will. Your executors will thank you.
3. Think about the in-laws. If your child buys with a partner and the relationship ends, half your gift can walk out of the door. A declaration of trust drawn up by their solicitor can record that the deposit is your child's, and some couples make a cohabitation or pre-nuptial agreement. Raise it kindly; it is not an insult, it is paperwork.

If you would rather it were a loan

A loan is not a gift, and most lenders will not accept a deposit that has to be repaid (a few will, with a formal agreement and the repayments counted in affordability). Alternatives that keep you some control:

• Family deposit or "springboard" mortgages: your savings sit in a linked account as security for a few years, earning interest, and come back to you if all goes well.
• Joint borrower, sole proprietor: your income supports the mortgage but you do not own the home, so no stamp duty surcharge for you. You are liable for the debt.
• A guarantor: rarer now, and it can put your own home at risk. Take advice.

Never gift more than you can afford to lose, never gift under pressure, and take advice from a solicitor or a later-life financial adviser before giving a large sum. The Gifting a Deposit Guide has a checklist and gift-letter wording to print.

A note on the numbers. Tax thresholds, benefit limits and typical costs are correct as far as we know at the time of writing (2026) and, unless we say otherwise, are for England. Scotland, Wales and Northern Ireland differ in places. Rules change and your circumstances matter. This is information, not advice: check the current position and talk to a solicitor, an FCA-authorised adviser or a tax professional before you act.