It sounds like a simple family decision, but it can have major tax and legal consequences

Many families ask the same question: should a house in the UK be put in the child’s name or remain in the parents’ name?

At first glance, it sounds straightforward. In reality, the decision can affect legal ownership, tax on rental income, Capital Gains Tax, Stamp Duty Land Tax, inheritance planning, and who actually controls the property in the future. A wrong decision made with good intentions can create avoidable tax exposure later on.

Can a child under 18 legally own a house in the UK?

In England and Wales, a minor cannot hold the legal estate in land directly. If someone attempts to transfer legal title in land to a minor, the transfer does not pass the legal estate to the child; instead, it operates so that the land is held on trust for the minor. HMRC’s trust registration guidance also reflects this position and gives an example of adults holding property on trust where one child beneficiary is under 18 and cannot hold legal title.

That means if parents want to buy property “for the child” while the child is still under 18, the usual legal route is some form of trust arrangement rather than direct legal ownership by the child. In practical terms, the parents or other adult trustees would hold the legal title, while the child may have the beneficial interest.

Can parents buy a property through a trust for their child?

Yes, that can be done, but families need to understand that a trust is not a magic way to avoid tax.

A trust separates legal ownership from beneficial ownership. Land Registry guidance on private trusts of land explains that the legal title and the underlying beneficial interest can be split. So, if parents want to hold a property for a child, a trust structure may be used, but the tax treatment depends on the exact type of trust and who funded it.

Where a parent sets up a trust for their unmarried minor child, HMRC says special parental settlement rules can apply. HMRC’s guidance on parental trusts states that trust income is effectively taxed on the parent who created the trust. In other words, if rental income arises from a property held in such a trust, the tax result may still come back to the parent rather than being taxed as the child’s income.

So while a trust may help with ownership structure, it does not automatically move the Income Tax burden away from the parents during the child’s minority.

What happens once the child turns 18?

Once the child reaches 18, they can generally hold legal title in their own name. At that point, the family may consider transferring full ownership to the child directly, or the trust position may change depending on how it was set up. The legal restriction on minors holding legal title no longer applies once the beneficiary is an adult.

However, becoming an adult does not remove the tax consequences. A transfer to the child may still trigger Stamp Duty Land Tax in some cases, Capital Gains Tax issues for the parents, and longer-term inheritance planning consequences depending on how the transfer is structured.

If the child is not UK tax resident, can extra Stamp Duty Land Tax apply?

Yes, potentially.

For residential property in England and Northern Ireland, a 2% SDLT surcharge can apply where one or more buyers is treated as non-UK resident for SDLT purposes. GOV.UK says the surcharge applies to purchases of major interests in residential property costing £40,000 or more where the transaction is a non-resident transaction. GOV.UK’s SDLT guidance also confirms that non-UK resident buyers usually pay a 2% surcharge on residential purchases in England and Northern Ireland.

So if an adult child is going to be named as purchaser or owner and is not UK resident for SDLT purposes at the relevant time, the family may face a higher SDLT bill. That needs to be checked carefully before completion, because SDLT residence rules are technical and depend on the statutory test for the transaction.

What if parents gift or transfer a property to their child later?

This is where many families underestimate the tax risk.

For Capital Gains Tax purposes, gifting property to a child is still treated as a disposal. If the property has increased in value since it was acquired, a gain may arise even though no money changes hands. GOV.UK confirms that residential property gains are generally taxed at 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers from 6 April 2025 onwards.

That means the commonly repeated “up to 28%” warning is now out of date for current residential property CGT rates. Under current rules, the relevant residential CGT rates for individuals are generally 18% and 24%, depending on income position.

There is also an important distinction to make. If the property has genuinely been the parents’ only or main residence and full Private Residence Relief applies, there may be little or no CGT. But if the property is an investment property, a second home, or a property the child does not live in, CGT can become a very real issue when it is transferred. GOV.UK’s Private Residence Relief helpsheet explains that relief applies to a private residence, not automatically to every family property.

What about Inheritance Tax if parents give the property away?

Lifetime gifts can also create Inheritance Tax risk.

GOV.UK states that if someone survives 7 years after making a gift, no Inheritance Tax is generally due on that gift, unless trust rules create a different result. But if the donor dies within 7 years, the gift can still be brought back into the Inheritance Tax calculation. Gifts made in the 3 years before death may be taxed at 40%, and taper relief may reduce the tax for gifts made between 3 and 7 years before death.

The basic nil-rate band remains £325,000, and GOV.UK also confirms that estates may in some cases benefit from the residence nil-rate band of £175,000, subject to the detailed rules. But the important practical point is that gifting a house to a child does not automatically remove it from the Inheritance Tax picture straight away.

What if the parents keep the house in their own names?

Keeping the property in the parents’ names can make control simpler.

If the parents remain the legal owners, they retain control over sale, remortgage, occupation, and future planning decisions. That may suit families who want flexibility or who are not ready to hand over ownership completely.

But keeping the property in the parents’ names also means the asset remains part of their estate, and if there is no clear will, the property may not pass in exactly the way the family intended. GOV.UK’s inheritance tax and estate guidance makes clear that estate value, thresholds, and gifts all feed into the final tax and succession picture.

So keeping the property in the parents’ names may preserve control, but it does not remove the need for proper succession planning.

Is a trust or a will sometimes the safer route?

Often, yes.

If the family’s priority is to protect the child’s future benefit while also keeping control and planning for tax properly, a trust or a carefully drafted will may be more appropriate than simply putting the house straight into the child’s name. Which route is best depends on the child’s age, the property’s intended use, whether it is a main residence or investment property, the parents’ tax residence, and the family’s inheritance goals.

There is no one-size-fits-all answer. A structure that works well for one family can create unnecessary tax for another.

The key question is not just “whose name goes on the title?”

The better question is this: what is the family actually trying to achieve?

If the aim is to help a young child in the future, direct ownership may not even be legally possible yet. If the aim is to reduce tax, the family needs to be realistic because trusts, gifts, SDLT, CGT, and IHT all have separate rules. If the aim is inheritance planning, then the will and overall estate structure may matter more than the Land Registry title on its own.

How can A2B Tax help?

A2B Tax can help families review the tax side of a property ownership decision before action is taken.

That may include checking whether a trust structure is appropriate, identifying potential SDLT exposure, reviewing whether a transfer could trigger Capital Gains Tax, and considering the Inheritance Tax implications of gifting property to children. It can also help families understand where tax advice needs to be coordinated with a solicitor or private client lawyer before ownership is changed.

Conclusion

Whether a house in the UK should be held in a child’s name or a parent’s name depends on far more than preference.

For children under 18, direct legal ownership is not generally possible in England and Wales, so a trust structure may be needed. If parents keep the property in their own names, they retain control, but inheritance planning becomes important. If the property is transferred to the child later, SDLT, Capital Gains Tax, and Inheritance Tax all need to be considered carefully.

Before deciding whose name should go on the property, it is worth checking the tax and legal consequences properly. Contact A2B Tax if you need support in reviewing the ownership structure, tax risks, and planning options for your family.