Introduction

The gift with reservation (GWR) provisions have a very broad application to almost all gifts in which the donor retains a benefit. However, in certain limited circumstances, a gift from which the donor continues to benefit will not be taxed as a GWR in his estate where:

1. •

   the donor may give full consideration for his retained benefit, and

2. •

   the donor may retain a very limited benefit from the gift

Additionally, some gifts are exempt from the GWR provisions, with some particular exceptions relating to land.

Full consideration

A sale for full consideration cannot be a gift with reservation. This is made clear in the primary legislation in that the provisions can only apply to disposals ‘by way of gift’. A sale at an undervalue does include an element of bounty and can be brought within the GWR rules.

Where the disposal is a gift and the donor wishes to retain some benefit for himself, the tax consequences of a GWR may be avoided if he gives full consideration