![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/GettyImages-2211339807-2eaa.jpg\")
\n\t\tRichard doesn\u2019t want to give his son \u2018handouts\u2019 (Picture: Getty Images\/Westend61)<\/p>\n
\t\t
\n\t\tRichard doesn\u2019t want to give his son \u2018handouts\u2019 (Picture: Getty Images\/Westend61)<\/p>\n
The Bank of Mum and Dad is now involved in roughly half of all first-time buyer purchases<\/a> in the UK.<\/p>\n For many young people facing a toxic combination of stagnant wages and soaring house prices, it\u2019s the only way to get onto the property ladder before the age of 40.<\/p>\n But while many are only too happy to help their kids out, there are those who feel handouts are no match for hard work and saving.<\/p>\n This week\u2019s reader, Richard, 79, from Cheshire<\/a>, is firmly in the latter camp.<\/p>\n However, a recent visit to his financial adviser has him rethinking his refusal to stump up a deposit for his grown-up son\u2019s his first home.<\/p>\n \t\t\t\t\tAsk Metro<\/p>\n Use AI to go deeper into the stories you care about \u2013 powered by Metro and trusted publications.<\/p>\n Wondering if this strategy is legitimate, he reached out to Metro consumer champion, Sarah Davidson.<\/p>\n The question\u2026<\/p>\n I took early retirement at 58 on a very generous final salary pension<\/a>. My wife still works part-time and we own our home outright. We are, by any measure, comfortable.<\/p>\n \t\t\t\tReady to start your homebuying journey?\t\t\t<\/p>\n You can access completely fee-free mortgage advice with London & Country (L&C) Mortgages, a partner of Metro. Customers benefit from:<\/p>\n \u2013 Award winning service from the UK\u2019s leading mortgage broker<\/p>\n \u2013 Expert advisors on hand 7 days a week<\/p>\n \u2013 Access to 1000s of mortgage deals from across the market<\/p>\n Unlike many mortgage brokers, L&C won\u2019t charge you a fee for their advice.<\/p>\n Find out how much you could borrow online<\/a><\/p>\n Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.<\/p>\n My issue is with my son, who is 39 and works in the arts. He earns very little and rents a flat in Manchester<\/a>.<\/p>\n He has been asking us to help him buy a property for years and we have always said no. We worked hard for what we have and we believe he should do the same.<\/p>\n \t\t However, my financial adviser has recently told me that our estate will face a significant inheritance tax bill when we die and that gifting money now could reduce that liability.<\/p>\n I am now wondering whether to give my son a deposit. I don\u2019t think he deserves a handout but, ultimately, he is going to inherit from us anyway and I don\u2019t want to hand over more to the government than I need to.<\/p>\n Is this a legitimate strategy, and does it make us terrible parents for only doing it for tax reasons?<\/p>\n The answer\u2026<\/p>\n Let\u2019s break this down: there are three things for you to consider.<\/p>\n One, you have resisted helping your son buy his first home to teach him the value of earning it for himself.<\/p>\n Two, you want your son to inherit the wealth you have earned in your lifetime.<\/p>\n Three, you want to protect as much of that wealth from His Majesty\u2019s Revenue and Customs as you can.<\/p>\n \t\t\t\t\tDo you think the parents should gift their son money for a house deposit?<\/p>\n Yes, it’s practical and helps reduce tax.Check<\/p>\n No, it doesn’t align with their values.Check<\/p>\n Perhaps, but only under certain conditions.Check<\/p>\n \t\t\t\t\tSign up to Metro\u2019s The Key newsletter for must-read property stories, DIY hacks and tips for buying a home.<\/p>\n Does this make you terrible parents? I\u2019m afraid that\u2019s a question for a different kind of agony aunt.<\/p>\n Instead, ask yourself a different question \u2013 does it matter? Money rarely sits well with emotional or moral choices so, where possible, I\u2019d advise pairing planning your finances with rational decisions.<\/p>\n From a purely financial perspective, your adviser is absolutely right. Gifting money during your lifetime is one of the most effective and legitimate ways to reduce an inheritance tax (IHT) bill.<\/p>\n But you need to understand exactly how the rules work, because the taxman does not simply look the other way the moment the money leaves your account.<\/p>\n \t\t Under HMRC rules, you can give away up to \u00a33,000 each tax year without it being added to the value of your estate.<\/p>\n This is your \u2018annual exemption\u2019. If you didn\u2019t use last year\u2019s amount, you can carry it forward, meaning you and your wife could potentially gift \u00a312,000 entirely tax-free right now. A house deposit is likely to be significantly larger than that though.<\/p>\n Anything you gift above your annual exemption becomes what HMRC calls a \u2018potentially exempt transfer\u2019 (PET).<\/p>\n The key word there is \u2018potentially\u2019. For the gift to become entirely free of inheritance tax, you must survive for seven clear years after handing the money over. This is known as the seven-year rule.<\/p>\n If you die within three years of making the gift, the entire amount will be counted as part of your estate and taxed at the standard 40% IHT rate, whereas if you die between three and seven years afterwards, the tax rate tapers down on a sliding scale \u2013 dropping to 32% in year four, 8% in year six and finally reaching zero once you pass the seven-year mark.<\/p>\n \t\t\t\tMore Metro Money Problems\t\t\t<\/p>\n It\u2019s important to make sure that if you are going to do this, you do it properly.<\/p>\n You will need to sign a \u2018gift letter\u2019 for your son\u2019s mortgage lender confirming the money is a non-refundable gift and that you hold no legal interest in the property. You cannot attach strings or demand the money back later if you fall out.<\/p>\n It\u2019s also worth remembering that the world you and your wife worked in is not the world your son is dealing with today.<\/p>\n The bottom line is that this way, your son gets the security of his own home and you get to keep a chunk of your wealth out of the hands of the Treasury.<\/p>\n It might not be the warmest parenting<\/a> moment of your life, but it\u2019s certainly a pragmatic one.<\/p>\n If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join our Facebook Group, Money Pot<\/a>.<\/p>\n Arrow Arrow Arrow![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/GettyImages-1182319229-543c.jpg\")
\n\t\tGetting on the ladder is harder than ever (Picture: Getty)<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/GettyImages-2170338615-4889.jpg\")
\n\t\tThere are a number of rules when it comes to inheritance tax (Picture: Getty Images)<\/p>\n
\nMORE: I was my daughter\u2019s birth partner \u2013 I\u2019ve never been so terrified<\/a><\/p>\n
\nMORE: My dad had schizophrenia \u2013 people would always ask me the same infuriating question<\/a><\/p>\n
\nMORE: Estate agents say this \u2018unfashionable\u2019 London area will soon be the next Hackney<\/a><\/p>\n