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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Household goods and personal goods: valuation and technical issues: gifts with reservation

When the taxpayer or their agent discloses on the IHT400 (IHTM10021) that the deceased has made a lifetime transfer (IHTM14000) of household goods, you need to be satisfied that those assets were effectively handed over at the time of the transfer. It is not unusual for a gift to be made of items of furniture or jewellery, for example, and for the transferor to keep these items at their house until they die.

In this situation, unless the transferor paid a full market rental to the transferee to use the items concerned, the transfer will be a gift with reservation (GWR) (IHTM14025) and you need to refer the case to Technical for advice. Shares and Assets Valuation will be able to advise you whether any rent paid was for the full market value.