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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Lifetime transfers: the charge to tax: the charge on lifetime transfers: gifts with reservation (GWRs)

You can find full details about GWRs earlier in this section of the manual. (IHTM14301)

The special rule for GWRs (IHTM04072) is that you can charge tax on

  • the value of the initial lifetime transfer, or
  • the value of the transferred asset at the date the reservation ceased (usually the date of death).

To decide which, you apply the double charges relief provisions. (IHTM14711).Whichever of the two amounts produces the higher tax liability is the amount payable. The other amount is reduced to nil.

The tax is calculated either:

  • on the loss to the estate basis, (either for the actual transfer, or for the transfer deemed to take place if the reservation ceased before death - NB the annual exemption is not deductible in the latter case (IHTM14343)) or
  • as property to which the deceased was beneficially entitled on death (if the reservation ceased on death).