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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
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Lifetime transfers: gifts with reservation (GWRs): tracing: supplementary provisions

The legislation at FA86 Sch20 Para2, 3 and 4 incorporates extensive and detailed supplementary provisions. The main ones are, very broadly that the donee is treated as continuing to have possession and enjoyment of any part of the gifted property which the donee:

  • makes a gift of, or
  • voluntarily parts with, for less than full consideration.

But this does not apply if the disposition by the donee is in favour of the donor. See the separate instructions if the donee settles the gifted property. (IHTM14403)

If the gift is of shares or debentures, treat any bonus and rights issues(IHTM18100) as comprised in the gift. Allow any consideration paid by the donee for the shares as a deduction in valuing the property comprised in the gift.

If the donee dies, then unless the property is settled by the donee’s will or intestacy, continue to apply the usual rules as if

  • the donee had not died and the acts of their personal representatives were his or her acts
  • property taken under the donee’s will or intestacy were taken under a gift made by them at the time of their death.

But, if the property is settled by the donee’s will or intestacy, see the separate instructions at IHTM14401.