About 50% of UK first-time buyers receive some level of family financial help with their deposit. Gifted deposits are a normal, well-trodden path — but the documentation requirements, lender rules, and tax treatment can derail an application if handled badly. This guide covers who can give, what evidence lenders need, the IHT implications for the donor, and the common delays that catch buyers and donors out.

What a gifted deposit is

A gifted deposit is money given by a family member toward your house deposit, with three key characteristics:

• No expectation of repayment. It's a gift, not a loan.
• No beneficial interest in the property. The donor doesn't get an equity share or a future claim.
• Funds from clean source. The donor's money must be lawfully obtained (savings, inheritance, sale of investment, etc).

Provided these three conditions are met and documented, most UK lenders accept gifted deposits without issue.

Who can give a gifted deposit

Accepted by almost all lenders

• Parents and step-parents
• Grandparents and step-grandparents
• Spouse or civil partner

Accepted by most lenders

• Siblings (full, half, step)
• Children gifting to parents
• Aunts and uncles

Accepted by some lenders only

• Cousins
• Close friends
• Long-term partners (unmarried)
• In-laws

Almost never accepted

• Work colleagues
• Business partners
• Acquaintances
• Anonymous donors

If your potential donor falls into the "some lenders only" category, a broker can identify which lender accepts the relationship.

The documentation lenders require

1. Gifted deposit letter

Signed by each donor. Must state:

• Donor's full name and address
• Buyer's full name and address
• Address of property being purchased
• Exact amount being gifted
• Statement that the funds are a gift, not a loan, with no expectation of repayment
• Statement that the donor will have no beneficial interest in the property
• Statement that the funds are from lawful sources
• Donor's signature and date

Many conveyancers and lenders provide a template. Best to use the template from your lender's panel solicitor to avoid wording rejections.

2. Donor bank statements

Most lenders want 3 months of statements showing:

• The deposit funds in the donor's account
• How the funds accumulated (regular savings, lump sum from investment sale, inheritance receipt, etc)
• No large unexplained deposits in the immediate prior period

3. Donor ID and proof of address

• Passport or driving licence
• Utility bill or council tax bill (within last 3 months)

4. Source of funds evidence

Where the donor's gift came from a recent specific source, evidence of that source:

• Property sale: solicitor's completion statement
• Inheritance: probate documents
• Investment sale: stockbroker statement
• Pension lump sum: pension provider statement
• Business sale: solicitor's completion documents

This is the most commonly-missed piece and a frequent source of delay.

The IHT considerations for the donor

Annual gift allowance

Each individual can gift £3,000 per tax year free of IHT implications. Unused allowance carries forward one year, so a donor who hasn't gifted in the prior year can gift £6,000 this year (£3,000 from each year).

Wedding / civil partnership gifts

Parents can gift £5,000 each (£10,000 from both parents) for a wedding or civil partnership, IHT-free. Grandparents can gift £2,500 each. Other relatives £1,000.

Small gifts

Up to £250 per recipient per tax year is fully exempt — but can't be combined with other allowances for the same recipient.

The 7-year rule (PETs)

Gifts above the allowances are "potentially exempt transfers" (PETs). If the donor dies within 7 years of the gift, the gift value may be added back to their estate for IHT calculation. After 7 years the gift falls fully out of their estate.

Tapered relief applies between years 3-7:

Years between gift and death	% of IHT on gift
0-3 years	40% (full rate)
3-4 years	32%
4-5 years	24%
5-6 years	16%
6-7 years	8%
7+ years	0% (fully exempt)

Nil-rate band

Each individual has a £325,000 nil-rate band. Gifts that fall within this band on death pay no IHT regardless of timing. The donor's overall estate matters — for most family gifts of £20,000-£50,000, the practical IHT exposure is minimal unless the donor's estate is very large or they die very soon after the gift.

Gifts from surplus income

Regular gifts from the donor's surplus income (not capital) are immediately IHT-exempt with no 7-year wait. To qualify, the gift must be: regular (not one-off); from income (not capital); leave the donor with sufficient income to maintain their normal standard of living. Useful for ongoing family help rather than one-off deposit contributions.

Tax-efficient gift structuring

Use both parents' allowances

Parents each have £3,000 annual + £5,000 wedding allowance. A married couple can gift £16,000 IHT-free this year (£3,000 each + £5,000 each wedding, if applicable) using allowances alone.

Use prior-year allowances

Unused £3,000 annual allowance carries forward one year. So donors who haven't gifted in the prior year have effectively £6,000 each this year before tax becomes relevant.

Time the gift carefully

If the donor has multiple gifts planned, spreading across tax years uses multiple annual allowances. A £20,000 gift split £6,000 this year + £6,000 next April + £6,000 the following April + £2,000 lump (using the small gift allowance) eliminates all 7-year exposure on the staged amount.

Consider gifts from surplus income

Ongoing family help structured as regular gifts from surplus income is immediately IHT-exempt. Useful for ongoing rent coverage during deposit-saving years rather than a single large lump.

Common gifted deposit mistakes

Donor not realising they need to give bank statements

Donors are sometimes surprised that the lender wants 3 months of their personal bank statements. The donor must consent — they own the data. Plan the conversation early.

Source-of-funds evidence missing

Where the gift money came from a specific source (inheritance, property sale), the donor needs evidence of that source. A large lump appearing in their account without explanation triggers AML queries.

Conditional or repayable gifts misrepresented

If the donor expects repayment ("when you can"), or expects to live in the property, it's not a gift — it's a loan or a joint purchase. Lenders will detect this in enquiries. Be honest about the structure.

Cash gifts

Lenders won't accept large cash deposits into the buyer's or donor's bank account. Funds need a clear paper trail. If the donor was holding cash savings, deposit them into a bank account 3-6 months before applying.

Gift from overseas donor

Lenders treat overseas gifts with extra scrutiny. The donor's overseas bank statements need translation if not in English. AML checks take longer. Plan 2-4 weeks extra in the timeline.

Underestimating IHT exposure

For elderly donors making large gifts, take tax advice. The 7-year IHT exposure on a £50,000 gift could be £20,000 if the donor dies in year 1-3 and their estate is above the nil-rate band.

Joint Borrower Sole Proprietor (JBSP) — alternative to gifted deposit

JBSP is a mortgage structure where a parent (or other family member) is on the mortgage to support affordability, but the buyer is the sole legal owner. The parent's income lifts borrowing capacity; they have no equity claim.

Advantages:

• Boosts borrowing without requiring a gifted deposit (parent income vs cash)
• Buyer is the sole legal owner — no second charge or beneficial interest
• No SDLT additional-property surcharge on the new purchase (parent isn't on the deeds)

Disadvantages:

• Parent on the mortgage is jointly liable if buyer defaults
• Parent's credit file is affected by the mortgage
• Lender choice narrower than standard mortgages

JBSP is increasingly common as a complement or alternative to gifted deposits. Most major UK lenders offer it (Halifax, Barclays, Nationwide, NatWest, several specialists).

How gifted deposits interact with SDLT

The gift itself doesn't affect SDLT — SDLT is calculated on the property price, not the deposit source. A first-time buyer using a gifted deposit still qualifies for FTB SDLT relief.

Critical: the donor must NOT be added to the property deeds. If they are, they become a joint owner and the additional-property SDLT surcharge applies (because they already own another residential property). See the additional property surcharge guide for the rules.

How gifted deposits affect affordability

A gifted deposit is treated identically to your own savings once documentation is satisfied. The lender's affordability assessment is based on your income alone — the donor's income doesn't help.

The size of the gift affects which LTV band you can access. A £30,000 gift on a £250,000 purchase gives 12% deposit — better rates than 5%, more lender choice. See how much deposit do I need for the LTV-to-rate map.

Gifted deposit timeline

Plan additional time vs a self-funded deposit:

1. Month -3: Conversation with donor. Confirm they're willing and can provide documentation.
2. Month -2: Donor moves funds to easily-evidenceable bank account if not already there.
3. Month -1 to 0: Mortgage application submitted. Lender requests donor documentation.
4. Conveyancing stage: Conveyancer also runs AML checks on the donor. Allow 1-2 weeks extra.
5. Completion: Donor transfers funds to your conveyancer (not to you directly — this avoids the funds passing through your account).

Total additional time: 2-3 weeks vs a self-funded purchase. Plan for it in the conveyancing timeline.

Frequently asked questions

What is a gifted deposit?

Money given by a family member toward a property purchase, with no expectation of repayment and no beneficial interest in the property.

Who can give a gifted deposit?

Most lenders accept parents, step-parents, grandparents, siblings, spouses, civil partners. Some extend to aunts, uncles, close friends. Work colleagues and unrelated individuals typically refused.

What documents do I need for a gifted deposit?

A gifted deposit letter from each donor; 3 months' bank statements from the donor; ID for the donor; source-of-funds evidence (sale of investment, savings build-up, etc).

Can family lend me a deposit?

Most lenders refuse loan-based deposits — they want clean gifts. A small number of specialist lenders accept family loans with formal repayment terms.

Is there tax on a gifted deposit?

No tax on the buyer receiving the gift. The donor may face IHT implications if they die within 7 years of the gift.

How much can be gifted?

No cap from a mortgage perspective. Tax considerations: each donor has £3,000/year IHT-free gift allowance plus £5,000 wedding allowance. Gifts beyond fall within 7-year IHT window.

What delays do gifted deposits cause?

Common delays: donor bank statements not provided; gifted deposit letter wording rejected; source-of-funds evidence requested; overseas donor AML checks slower.

Can a gifted deposit affect the mortgage application?

It can affect lender choice. The application is otherwise unchanged — the gifted deposit is treated identically to your savings once documentation is satisfied.

Related guides

Related calculators

Last reviewed: 21 June 2026.