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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: gifts with reservation (GWRs): settled property: reasonable commercial arrangements

Where shares are settled and

  • the settlor is a trustee
  • a director/employee of the company,

the mere fact that the terms of the trust empower the trustees to retain for example, directors’ fees will not, of itself, amount to a reservation.

In this context, you need to satisfy yourself that the remuneration package was on a reasonable commercial basis.

Disregard any rights over the gifted property which:

  • the donor retains
  • can be exercised solely in a fiduciary capacity for the benefit of the donees or settlement

when deciding whether the property was enjoyed to the donor’s exclusion (IHTM14333).

See the instructions on the continuation of existing reasonable commercial arrangements (IHTM14337).


Jane transfers shares in an unquoted company into a settlement of which she is trustee (but not a beneficiary). She is entitled to retain remuneration for her services as a director of that company.

The continuation of reasonable commercial arrangements governing the remuneration and any other benefits, for the donor’s services in the company entered into before the gift would not, by itself, amount to a reservation, provided the benefits were in no way linked to or affected by the gift. On the other hand, if, as part of the overall transaction, including the gift, new remuneration arrangements are made you will need to consider whether the new package amounted to a reservation ’by contract or otherwise’.