You can give your children any amount of money at any time, because there is no limit on lifetime gifts and no tax to pay at the point of giving. Whether a gift later stays free of inheritance tax depends mainly on how long you live afterwards and which exemptions the gift uses.
This guide focuses on the points that are specific to giving to your own children: the 7-year rule, how to hold a gift for a child who is too young to receive it, and the income-tax rule that catches money a parent gives to a child under 18. For the full list of tax-free gift allowances and the figures behind each one, see our companion guide on how much money you can gift tax free. Figures are current as at August 2026 and are subject to change.
Is there a limit on giving money to your children?
No. There is no gift tax in the UK, so handing money to a child never triggers an immediate charge, and there is no cap on how much you can give. The only question is whether a gift is counted back into your estate if you die within seven years. Gifts covered by an exemption, such as the annual exemption or gifts out of surplus income, are outside your estate straight away. Larger gifts are free of inheritance tax provided you survive seven years from the date of the gift (gov.uk, gifts and Inheritance Tax, as at August 2026, subject to change).
The gift allowances a parent can use
There is no special parent-to-child allowance. A parent uses the same exemptions as anyone else, and each applies per giver, so two parents each have their own. The most relevant ones for giving to children are set out below.
| Allowance | Amount (2026-27) | Point for parents |
|---|---|---|
| Annual exemption | £3,000 per tax year | A total across all your gifts, immediately exempt. Unused amount carries forward one tax year only. |
| Small gifts | £250 per person | Useful for birthdays and festive gifts to a child who has not already used your annual exemption that year. |
| Wedding or civil partnership gift | £5,000 to a child | Given when a child marries or forms a civil partnership, on or shortly before the ceremony. |
| Normal expenditure out of income | No fixed limit | Regular gifts from surplus income, for example a standing order towards rent or school fees. |
Source: gov.uk/inheritance-tax/gifts, as at August 2026, subject to change.
The normal expenditure exemption suits parents who help an adult child on a regular basis. To rely on it, the gifts should come from income rather than capital, form a settled pattern, and leave you able to maintain your normal lifestyle. Keeping a simple record of income, outgoings and the gifts helps show it applies. For the different wedding-gift limits, the spouse exemption and the carry-forward rules in full, see how much money you can gift tax free.
The 7-year rule on larger gifts to children
A gift above your exemptions, such as a house deposit or a lump sum towards a first home, is a potentially exempt transfer. There is no tax to pay when you make it. If you survive seven years from the date of the gift, it falls out of your estate entirely. If you die within seven years, the gift is added back when working out any inheritance tax, and it is set against your nil-rate band first (gov.uk, gifts and Inheritance Tax, as at August 2026, subject to change).
The nil-rate band is £325,000 and the residence nil-rate band is up to £175,000, both frozen until 5 April 2031 (gov.uk, Inheritance Tax, as at August 2026, subject to change). Because a gift within seven years uses the nil-rate band before the rest of the estate, a large gift to a child can raise the tax on what remains, even where no tax is charged on the gift itself. Taper relief only reduces the tax where gifts in the seven years before death come to more than the £325,000 nil-rate band, and it reduces the tax rather than the value of the gift. Our inheritance tax guide sets out the taper rates and how the bands fit together.
Holding the money until a child is older
Many parents want to help a young child without handing over a lump sum they can spend at 18. Two common routes let you give now while keeping the money invested for later.
- Bare trust. Assets are held in a trustee's name, but the child is absolutely entitled to all of the capital and income and can take them at 18 in England and Wales, or 16 in Scotland (gov.uk, types of trust, as at August 2026, subject to change). A gift into a bare trust for a child is a potentially exempt transfer, so the same 7-year rule applies, unlike a discretionary trust where a lifetime charge can arise.
- Junior ISA. A tax-free wrapper for a child under 18, with a subscription limit of £9,000 for the 2026-27 tax year. Interest, dividends and growth inside it are free of tax. The child can take control of the account at 16 but cannot withdraw the money until they turn 18 (gov.uk, Junior ISAs, as at August 2026, subject to change).
Income tax and the £100 rule for parental gifts
Inheritance tax is not the only tax that can touch a gift to a child. There is a separate income-tax rule that applies only to money a parent gives to their own child. If money you give your child, while they are under 18 and unmarried, produces more than £100 in interest or other income in a tax year, all of that income is treated as yours and taxed as the parent's, not the child's (gov.uk, savings for children, as at August 2026, subject to change). The £100 limit applies per parent, and it is the reason many parents avoid holding large sums in a child's ordinary savings account.
The rule does not catch gifts from grandparents, other relatives or friends, and it does not apply to money held in a Junior ISA or a Child Trust Fund, where the income stays tax free whoever gave it. Once the child turns 18, or marries, the rule stops applying and the income becomes the child's for tax.
Points to weigh before you gift
Giving money to a child is straightforward, but a few practical points are worth checking first.
- Keep it a genuine gift. If you give something away but keep a benefit from it, such as gifting your home but continuing to live there rent free, it can count as a "gift with reservation of benefit" and stay inside your estate for inheritance tax (gov.uk, gifts and Inheritance Tax, as at August 2026, subject to change).
- Care costs. Giving money away shortly before needing care can be treated by a local authority as deliberate deprivation of assets when it assesses what you pay, so gifting is only one part of planning for, limiting or mitigating the impact of care fees. Our page on care home fees covers how the means test works.
- Your own security first. Money given away cannot easily be recovered if your circumstances change, so keep a comfortable margin for your own needs before making significant gifts.
- Keep records. Note the date, amount, recipient and which exemption applied. Clear records make it easier for whoever administers your estate to show the position.
From 6 April 2027, most unused pension funds and death benefits are due to be brought within the value of the estate for inheritance tax, a change announced at the Autumn Budget 2024 that may affect how families think about lifetime giving (gov.uk, policy paper published 21 July 2025, as at August 2026, subject to change).
- No gift tax and no limit on what you can give a child; larger gifts are free of inheritance tax after 7 years (gov.uk).
- Annual exemption: £3,000 per tax year, per giver, with one year of carry-forward (gov.uk).
- Wedding gift to a child £5,000; small gifts £250 per person (gov.uk).
- Junior ISA subscription limit £9,000 for 2026-27; income and growth tax free (gov.uk).
- Parental gifts to a child under 18 that earn over £100 income a year are taxed on the parent (gov.uk).
- Nil-rate band £325,000, residence nil-rate band up to £175,000, frozen until 5 April 2031 (gov.uk).
Scotland and Northern Ireland
Inheritance tax and the gift rules described here apply across the whole of the UK, so the exemptions, the 7-year rule and the £100 income-tax rule are the same in Scotland and Northern Ireland. Two things differ. A child becomes absolutely entitled to a bare trust at 16 in Scotland rather than 18. And Scotland has its own law of succession, including legal rights that can entitle children and a spouse to a fixed share of an estate, which can interact with lifetime giving.
Frequently asked questions
Is there a limit on how much I can give my children?
No. There is no gift tax in the UK and no cap on lifetime gifts, so you can give your children any amount with no tax to pay at the time. Gifts covered by an exemption are outside your estate immediately, and larger gifts are free of inheritance tax once you survive seven years. For the full list of tax-free allowances, see our guide to how much money you can gift tax free (gov.uk, as at August 2026, subject to change).
Can I give my child a large lump sum, such as a house deposit?
Yes. There is no limit on what you can give and no tax to pay when you make the gift. A large gift above your yearly exemptions is a potentially exempt transfer, which is free of inheritance tax if you survive seven years. If you die within that time, it is added back and set against your nil-rate band (gov.uk, as at August 2026, subject to change).
Do my children pay tax on money I give them?
A child does not pay tax on the gift itself. There is one catch specific to parents: if money you give a child under 18 earns more than £100 in interest or other income in a tax year, that income is taxed on you, the parent, not the child. This does not apply to money held in a Junior ISA or a Child Trust Fund, or to gifts from grandparents and others (gov.uk, savings for children, as at August 2026, subject to change).
Can I hold a gift in a trust or Junior ISA for a young child?
Yes. A bare trust holds the money in a trustee's name until the child is entitled to it at 18 in England and Wales, or 16 in Scotland, and a gift into one is a potentially exempt transfer under the 7-year rule. A Junior ISA is a tax-free wrapper with a £9,000 limit for 2026-27, where the child takes control at 16 and can withdraw at 18 (gov.uk, Junior ISAs, as at August 2026, subject to change).
What is the 7-year rule on gifts?
The 7-year rule means a gift that is not covered by an exemption falls fully outside your estate for inheritance tax once you have survived seven years from the date you made it. If you die within seven years, the gift is counted when working out the tax, and taper relief may reduce the tax where total gifts exceed the £325,000 nil-rate band (gov.uk, as at August 2026, subject to change).
Can I give money away to avoid care home fees?
Giving money away specifically to reduce what you might pay for care can be treated by a local authority as deliberate deprivation of assets during the means test, and it can assess you as if you still held the money. Gifting is therefore only one element of planning for, limiting or mitigating the impact of care fees, and the timing and reasons matter (gov.uk, as at August 2026, subject to change).