Yes — you can legally gift property to anyone. But if they’re not your Spouse or civil Partner, it’s almost never tax-free.
Here’s what you need to know about gifting a home to an unmarried Partner, Niece, Nephew, or even a Friend — and the taxes that can follow.
If you’re thinking of gifting to your Children instead, we’ve covered that in detail in this blog on gifting property to children
HMRC Treats Gifts Like Sales
If you give someone a property — even for free — HMRC treats it like you’ve SOLD IT AT MARKET VALUE. That means:
- You may owe Capital Gains Tax (CGT) now
- Your estate may still owe Inheritance Tax (IHT) later
Let’s look at how this plays out depending on who you’re gifting to.
Gifting to an Unmarried Partner
In the UK, there’s no such thing as a “common-law spouse.” If you’re not married or in a civil partnership, your Partner:
- Has no automatic right to inherit property if you die
- Gets no IHT exemption if you gift property to them
If the property is in your sole name and you die without a Will, your Partner could get nothing — the estate goes to children, or other relatives.
To protect them:
- Make a valid Will – name them explicitly
- Review how the property is owned – joint tenants vs tenants in common
- Consider life insurance – to cover potential IHT
- Get advice – estate planning is not just for the elderly or wealthy
- Get married or enter a civil partnership – this gives your partner automatic inheritance rights and full IHT exemption
Unmarried Partners also do not benefit from the Spouse exemption for IHT. If your partner inherits the property, it could trigger a tax bill at 40% (after allowances).
Gifting to a Niece or Nephew
You can also gift a property to a Niece or Nephew — but it’s not tax-free.
Capital Gains Tax (CGT)
- CGT applies immediately if the property has increased in value
- You’re taxed based on current market value — even if no money changes hands
Example:
- Bought for £100,000, now worth £240,000 = £140,000 gain
- Subtract £3,000 allowance = £137,000 taxable gain
- CGT at 18% or 24% could apply now
Inheritance Tax (IHT)
- Gifts to Nieces and Nephews are Potentially Exempt Transfers (PETs)
- If you die within 7 years, the gift may be taxed
- Full IHT (40%) applies if you die within 3 years
- Taper relief applies from years 4–7
- No IHT exemption applies to Nieces/Nephews
If you don’t survive 7 years, the gift is added back into your estate for IHT.
🎥 Prefer to watch?
Here’s a video where I explain what happens when you gift property to family — and what HMRC will tax, even if you give it away for free.
What If You Still Live in the Property?
Gifting a property and continuing to live in it creates a Gift With Reservation of Benefit.
That means:
- The gift doesn’t count for IHT — it stays in your estate
- You must pay full market rent to the new owner if you want the gift to be effective
- Applies whether you gift to a Partner, Niece, Nephew, or anyone else
HMRC will still treat it as part of your estate if you’re benefiting from it.
Can You Use a Trust to Avoid the Tax?
Some people try to put the property into a Trust — but this doesn’t guarantee tax savings.
- CGT still applies on transfer
- IHT may apply immediately if over your nil-rate band (£325,000)
- Trusts have legal costs, reporting duties, and admin
Types of trusts sometimes used:
- Bare Trusts – simple but fixed, little flexibility
- Discretionary Trusts – flexible, but complex
- Life Interest Trusts – protect occupancy for a partner, pass to children later
These can be useful in family arrangements but must be set up properly.
Some people try to use a Trust instead — but it has its own tax consequences. Read more about putting property in a Trust here: Should You Put Your Property in a Trust?
Final Thoughts
Yes, you can give your property to anyone you choose — but there are tax consequences to think through first.
Whether it’s a partner, niece, nephew, or even a friend — get advice before you act.
📞 Book a clarity call today and we’ll walk you through the best way to gift property — without creating tax headaches.