I3.408 GWR—examples relating to gifts of an interest in land
These examples illustrate the points made in para I3.407.
Example 1—simple lease carve-out
On 15 March 1999 Albert grants a 15-year lease of his residence 'Mon Repos' at a yearly rent of £5, with no landlord's covenants apart from quiet enjoyment, to a nominee for himself, and immediately afterwards gives the reversion to his nephew Brian. The nominee then assigns the lease to Albert. At the date of the gift of the reversion, Albert's estate was diminished by £80,000 by the gift. Albert dies on 4 April 2018, still living at Mon Repos. At that date the lease is worth £150,000, the reversion is worth £650,000, and the vacant possession value of Mon Repos is £1,200,000.
The Ingram decision means that the original GWR provisions in FA 1986, s 102 do not apply, but the additional provisions relating to an interest in land do apply. FA 1986, s 102A applies because during the 'relevant period' (in this case the seven years preceding Albert's death) he has 'enjoyed' the leasehold interest in the land and it has enabled him to occupy the land otherwise than for full consideration. It has the effect that the reversion is part of Albert's estate on death, as well as the lease which is actually part of his estate on death. The lease and reversion will be valued in combination (see I8.205) so that the full vacant possession value of £1,200,000 is charged to IHT on Albert's death.