Trusts and Inheritance Tax

Gifts with reservation ― further provisions

Produced by Tolley
  • 19 Oct 2021 23:14

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Gifts with reservation ― further provisions
  • Introduction
  • Agricultural property relief (APR) and business property relief (BPR)
  • Substitutions of and accretions to property subject to a reservation
  • Variations in distribution of deceased estate

Gifts with reservation ― further provisions

Introduction

This guidance note looks at the specific gifts with reservation rules regarding:

  1. agricultural and business property

  2. substitutions and accretions

These additional rules are to be found in FA 1986, Sch 20.

It also considers the gift with reservation (GWR) consequences when a person redirects property he has inherited under an instrument of variation.

Agricultural property relief (APR) and business property relief (BPR)

Special rules apply where a donor reserves a benefit in a gift which qualifies for BPR or APR. The availability of those reliefs depends on:

  1. the character of the property given

  2. the nature and extent of the ownership

  3. the duration of ownership and occupation

All the relevant conditions are set out in the Agricultural property relief (APR) and BPR overview guidance notes.

Where a donor makes a gift which qualifies for APR or BPR, and he reserves a benefit in it, it will be necessary to determine whether the property still qualifies for APR or BPR when he dies since it will be taxed as part of his estate. The ownership of both the donor and the donee are relevant:

  1. the character of

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