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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Lifetime transfers: gifts with reservation (GWRs): the gift: defining the gift

The gift with reservation (GWR) provisions can only apply if there has been a gift. There is no definition of ‘gift’ in FA86/S102 or FA86/SCH20 so the word must be given its ordinary meaning. A gift will usually be a transfer of value but need not be, for example, the grant of an interest-free loan (IHTM14317).


A husband and wife, Arthur and Betty, and their son Colin are in partnership. Arthur and Betty feel that Colin is working the hardest and making a substantial contribution to profits. They transfer a sum from their capital accounts to him to recompense him for his additional efforts.

If the transfer was commensurate with the additional contribution Colin was expected to make, then, because the transfer did not confer any gratuitous benefit on Colin, it is not a gift, so it cannot be a GWR. However, in practice you should not assume that the transfer was commensurate. You should deal with the case initially on the basis that there was a gift and, if the taxpayer objects, refer the case to Technical for advice.