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Gifted Deposit - 3 things you must do when gifting a deposit

(Last Updated: 14/04/2023)
9 min read
The majority of first time buyers get a gifted deposit to support their home purchase. When gifting money for a house deposit there is a mandatory process to follow:

    Gifted deposit declaration. A gifted deposit letter completed by the parties gifting the money. It needs to be in a specific format and you must report the gift to your mortgage lender (even if it is already in your bank account).

You should also consider the Inheritance Tax implications and the risk of voiding a property sale if the gifter is made bankrupt in the next 5 years. Find out more and download a free template gift letter acceptable by all mortgage lenders.

Suitable for all purchase transactions.


    What is a Gifted deposit declaration?

gifting money for house deposit
Your solicitor will require a letter from you confirming that the money you are providing is a gift and that you have no rights over the property. A signed letter to your child should suffice and a copy of this should be supplied to their conveyancing solicitor.

The process of proving a gift is incredibly important as it evidences that the money no longer belongs to the party who has given the money and as such there can be no future claim to a beneficial interest or right to the property.

The clock will also start ticking on the gift rules relating to Inheritance Tax and Insolvency from the date the gift letter is signed. If you are gifting your whole property to family then the process is different and you should read - 4 ways to gift your property to children

We specialise in handling gift cases so if you need a quote for your conveyancing then please get in contact by calling 0333 344 3234 (local call charges apply) or emailing and we will provide you a fixed fee quote backed by a No Sale No Fee guarantee.


    What are the gifted deposit solicitor checks?

Your lawyer needs to get ID (identification) from whoever is gifting the deposit. This is to meet with their internal AML (Anti-Money Laundering) procedures and these vary considerably from solicitors to solicitors. To find out on what ID is required please read the following – What ID does your solicitor need?

Photo ID
Proof of Address
(a minimum of 2 are required)
  • Passport (this is the best one to provide); or
  • Driving Licence
  • Bank statement (this is the best one to provide - especially if this is where the money is being held)
  • Utility bill (gas,  electricity, council tax)
  • Driving Licence
  • HMRC letter

Whether your solicitors will accept originals, certified copies, non-certified copies or even a face to face visit depends on which solicitors you are using. Speak to your solicitors early on to make sure you know exactly what they need in order to receive the deposit.

Inheritance Tax on Gifted Deposits
Gifts made between 1 to 7 years where your estate is over £325,000 have a rate of Inheritance Tax to pay. This rate reduces for the gift based on the length of time between the gift and death.
Number of years before death
Rate of IHT on the gift
0 to 3 Years
3 to 4 years
4 to 5 years
5 to 6 years
6 to 7 years
7 or more years


    Where did the gift come from?

Gifted Deposit Declaration
Another part of the Anti-Money Laundering checks your solicitors have to do is prove they know where the funds came from. For most it’ll be from a sale of an expensive asset (normally a house), a pension draw down or sale of shares; all of these are easy to prove with copies of the relevant documents showing where the large sum of money has come from.

What is harder to prove is when funds have been accrued from earnings over a long period of time or has come from multiple sources. Both of these sources will need to be explained in detail to satisfy the solicitor and to meet with their AML procedures. Once again, these procedures vary considerably from solicitors to solicitors, however most should be satisfied if you can properly evidence where the money has come from.

For money accrued from savings you should provide bank statements showing how the money has been accruing over the last 6 to 12 months within your bank account.

The more complex it is to answer questions about where your money has come from, the more detail you will need to provide to your solicitor to satisfy their AML checks. The best advice is to be upfront and provide more information rather than less.

To read our comprehensive article on proof of funds click here - How to prove source of funds

Some solicitors charge an additional fee for handling the work for a gift
You should speak to your solicitor at the outset to make sure that the gift work is included within your solicitors' original quote. The cost for this extra work varies from £50 to £100 depending on your solicitor, however we include this within our fixed fee - click to get a quote - Fixed Fee Conveyancing Quote or call 0333 344 3234 (local call charges apply).

Mortgage it a loan or is it a gift?

When a parent gives money to their child to fund the mortgage deposit it is either a loan or a gift. Read more on the difference here - Gifted Deposit? Or is it a loan from your parents?. If the deposit is a loan then it needs to be declared as such to the mortgage lender and agreed within the mortgage offer. Most mortgage lenders will agree to a loan from parents as long as it is a second charge.

If your parents don't want to state it is a loan then a Nationwide gifted deposit can be repaid to your parents on sale of the property. This is called a repayable gift, however not all mortgage lenders allow this.

Frequently Asked Questions
Andrew Boast of Sam Conveyancing
Written by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh Bailey, Digital Marketing Manager
Reviewed by:

Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.

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