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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
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Lifetime transfers: gifts with reservation (GWRs): the gift: initial requirements

In order for the gift with reservation (GWR) provisions to apply

  • an individual (IHTM14312)
  • must have disposed of property (IHTM14313)
  • on or after 18 March 1986
  • by way of gift (IHTM14315)
  • the gift not being subject to a specified exemption (IHTM14318)

If you are dealing with a life policy, (refer to the separate instructions (IHTM14421).

Gifts made before 18 March 1986 cannot be the subject of a GWR claim.

Settled property

A pre-18 March 1986 settlement which would have been caught by the GWR provisions had it been made after 17 March 1986 will therefore escape the GWR charge unless further gifts into settlement are made after that date. The GWR provisions will apply to the property settled by those further gifts.

Fuller details about dealing with settled property (IHTM14391) are included in these GWR instructions.

Example

On 1 January 1985 Frederick settled £100,000 on discretionary trusts under which he was a potential beneficiary. On 1 January 1989 he added a further £50,000 to the settlement. Frederick died on 1 April 1992, having remained a potential beneficiary throughout.

The GWR provisions apply to the 1989 addition but not to the property originally settled. The GWR claim extends to the assets in the settled fund at 1 April 1992 representing that £50,000. The Double Charges Regulations (IHTM14711) will be in point.