---
title: "Gifting Property: What Taxes Do You Need to Pay? | UK 2026/27"
description: When clients transfer real estate to family members or trusts, they often assume that an absence of cash consideration means an absence of tax. However, the UK tax code rigidly taxes the transfer of value. If you are advising a…
url: "https://www.accountingfirms.co.uk/knowledge-bank/gifting-property-what-taxes-do-you-need-to-pay-uk/"
updated: "2026-08-11"
category: The tax basics
---

# Gifting Property: What Taxes Do You Need to Pay? | UK 2026/27

When clients transfer real estate to family members or trusts, they often assume that an absence of cash consideration means an absence of tax. However, the UK tax code rigidly taxes the transfer of value. If you are advising a client and they ask, "gifting property: what taxes do you need to pay?", you must assess the transaction across three separate tax heads: Capital Gains Tax (CGT) for the donor, Stamp Duty Land Tax (SDLT) for the recipient, and Inheritance Tax (IHT) for the estate.

Below is an exhaustive technical breakdown of the tax consequences, reporting requirements, and secondary liabilities for property gifts in the [2026/27 tax year](https://www.accountingfirms.co.uk/blog/good-timing-can-save-a-lot-of-tax/).

## Capital Gains Tax: The Market Value Rule

For CGT purposes, gifting a property constitutes a transaction otherwise than by way of a bargain made at arm's length.

Consequently, the donor is statutorily treated as disposing of the property at its open market value at the time of the gift.

> "Because a gift is not a bargain at arm’s length, the person making the gift (the donor) is treated as disposing of the asset at market value, unless it is a situation within the paragraph below headed ‘No gain, no loss transfers’. The person receiving the gift (the donee) is treated as acquiring the asset at its market value at the time of disposal."

The donor must calculate their [capital gain](https://www.accountingfirms.co.uk/blog/capital-gains-reporting-service/) by deducting their original base cost from this deemed market value. If the property was not the donor's main residence (meaning Private Residence Relief is unavailable), the resulting gain is fully taxable. The recipient concurrently acquires the property with a new base cost equal to that exact market value.

**No Gain / No Loss Exception:** Gifts between [spouses](https://www.accountingfirms.co.uk/blog/have-my-pension-fund/) or civil partners who are living together circumvent this rule. The legislation treats spousal transfers as occurring on a "no gain/no loss" basis, meaning the donor triggers no tax, and the recipient simply inherits the donor's original base cost.

**60-Day Reporting Requirement:** If the gift triggers a CGT liability on UK residential property, UK resident donors must report the disposal and pay the estimated tax to HMRC within 60 days of completion using the "CGT on UK Property Account".  If the disposal is fully covered by [Private Residence Relief](https://www.accountingfirms.co.uk/blog/its-that-time-again-year-end-tax-planning/) or the Annual Exempt Amount, and no tax is due, the 60-day report is not required.

## The Donee's CGT Risk (Section 282)

Advisors must warn the recipient (the donee) of a hidden statutory risk. Under section 282 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), if the donor fails to pay the assessed CGT within 12 months of the due date, HMRC possesses the power to assess the donee for the unpaid tax.  While the donee has a statutory right to recover this sum from the donor later, HMRC will enforce the primary debt against the recipient directly.

## Stamp Duty Land Tax: The Mortgage Trap

Generally, a pure gift of property transfers no "chargeable consideration", meaning the transaction falls entirely outside the scope of SDLT.

However, a severe trap exists if the gifted property is subject to an outstanding mortgage. If the recipient assumes liability for the debt, the amount of the assumed mortgage constitutes chargeable consideration for SDLT purposes.

If this assumed debt exceeds the applicable SDLT threshold, the recipient must pay SDLT. For the 2026/27 tax year, advisors must apply the increased higher rates of SDLT (effective from 1 April 2025) if the recipient already owns another residential property. Under these revised rates, the surcharge begins at 5% for consideration up to £125,000, escalating to 7% for the band between £125,000 and £250,000.

## Inheritance Tax: PETs and the 7-Year Rule

From an estate planning perspective, an outright gift of property to another individual classifies as a Potentially Exempt Transfer (PET).

The donor must survive for seven years from the date of the gift for the property to drop completely out of their estate for IHT purposes.  If the donor dies within this seven-year window, the PET fails and becomes a chargeable transfer, consuming the donor's nil-rate band. For the 2026/27 tax year, the nil-rate band remains strictly frozen at £325,000, and the residence nil-rate band at £175,000.

If the PET fails, section 199(1)(b) of the [Inheritance Tax](https://www.accountingfirms.co.uk/blog/a-deadly-combination-death-and-taxes/) Act 1984 (IHTA 1984) states that the primary liability for any IHT due on the gift falls upon the recipient, not the deceased's estate.

### **Gift with Reservation of Benefit (GWRB)**

If a parent gifts a property to their child but continues to live in the property rent-free, the GWRB anti-avoidance rules under section 102 of the Finance Act 1986 activate.  Because the donor has not been entirely excluded from enjoying the asset, the property remains fully comprised within their estate for IHT purposes upon death, despite the initial gift having already triggered a [CGT disposal](https://www.accountingfirms.co.uk/blog/the-basics-of-share-loss-relief-you-must-be-kidding/).

## Summary Table: Tax Elements of Gifting Property (2026/27)

| Element / Action | Party | Tax Consequence | Statutory Authority / Reference |
| --- | --- | --- | --- |
| **Gifting the property** | Donor | CGT disposal at open market value. | HMRC Manual CG66450 |
| **Receiving the property** | Recipient | Acquires the asset at market value base cost. | HMRC Manual CG66450 |
| **Spousal transfer** | Both | No gain/no loss; defers the CGT charge. | HMRC Manual CG66450 |
| **60-Day Reporting** | Donor | Must file and pay CGT within 60 days of completion. | HMRC Manual CG-APP18-110 |
| **Unpaid CGT** | Recipient | HMRC can assess the recipient if donor defaults (>12 months). | s. 282 TCGA 1992 |
| **Assuming a mortgage** | Recipient | The debt is chargeable consideration for SDLT. | HMRC Manual SDLTM31812 |
| **SDLT Higher Rates** | Recipient | Assumed debt >£0 triggers 5% surcharge if an additional dwelling. | OOTLAR Notice |
| **Outright Gift (IHT)** | Donor | PET; becomes exempt if donor survives 7 years. | FA 1986 Sch 20 / s. 3A IHTA |
| **Donor stays in property** | Donor | GWRB applies; property remains in the IHT estate. | s. 102 FA 1986 |
| **Failed PET Liability** | Recipient | Recipient bears the IHT liability on the failed gift. | s. 199(1)(b) IHTA 1984 |

*For completeness, advisors should immediately verify if the gifted property qualifies as a business asset, as a joint election under section 165 of the TCGA 1992 can successfully hold over the capital gain, eliminating the upfront CGT charge for the donor while reducing the recipient's acquisition base cost.*