I3.437 GWR—Interactions with other tax provisions

IHT, trusts and estates

I3.437 GWR—Interactions with other tax provisions

I3.437 GWR—Interactions with other tax provisions

The statutory fiction of the GWR provisions imposes a charge on a person (the donor) in respect of property which he no longer owns, but from which he nevertheless derives some benefit. At the time when the donor is charged, the person who actually owns the property, the donee, is not charged. However, the fact that he owns the property does have a bearing on his own tax liabilities and on the reliefs for which the property might qualify.

This article explains how the GWR provisions work in relation to some other tax provisions, and how the position of the donee is relevant.

GWR and agricultural property and business property relief

Additional rules are included in FA 1986, Sch 20, para 8 for claiming agricultural or business relief in relation to property subject to a reservation. Eligibility for the reliefs is tested on each occasion or deemed occasion of charge as follows:

First, the original property gifted by the donor and which is subject to a reservation, must qualify on the occasion of the gift as either:


    •     relevant business property as defined for purposes of business relief (BPR)1, or


    •     agricultural property as defined for purposes of agricultural relief (APR)2

The gift must qualify for the relevant relief at that time3 even though it may not be a chargeable occasion because for example, it is a potentially exempt transfer. This means that the conditions relating to length of ownership and use of the property apply to the

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