A lifetime gift is a gift that you make during your lifetime, rather than on your death.
People choose to make gifts during their lifetimes for many different reasons. It may be that you want to help out your child with the purchase of their first flat, or assist an elderly relative with their care home fees. By reducing the size of your estate through giving away some of your assets during your lifetime, it is possible to reduce the amount of inheritance tax due on your death. Many people therefore consider making annual gifts as part of their tax planning strategy.
It is important that you do not continue to enjoy any significant benefit from any property that you give away during your lifetime. If you do, the property will still be deemed to be within your estate and inheritance tax will be due on it on your death.
If you continue to live, rent-free, in a house that you have given away, it will remain in your estate for inheritance tax purposes. There are two ways of removing the property from your estate, both of which are likely to be unattractive – either you move out of the property or you have to pay a full market rent.
Yes, you can. The rule is that the property must be enjoyed to your ‘virtual’ exclusion. This means that you can benefit in a very minor way - for example, paying a social visit, staying temporarily at a house you have given away, or getting the occasional lift in a car you have given away.