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HMRC internal manual

Inheritance Tax Manual

Gifts with reservation of benefit: Qualifying conditions for shares and securities

Shares and securities in a company charged under the GWR (IHTM04091) rules have to satisfy three conditions to qualify for agricultural relief

  • at the time of the gift with reservation of the shares or securities the value transferred (IHTM04028) by the gift has to qualify for either business or agricultural relief (IHTM24204).
  • the donee must retain ownership of the shares throughout the period between the date of gift and the date of the GWR charge, FA86/SCH20/para8 (3)(b).
  • at the time of the GWR charge the shares or securities must qualify for relief on the basis of a notional transfer of value by the donee, FA86/SCH20/para8 (1A)(b) (IHTM24205).

Before you attempt to establish whether agricultural relief is due on the notional transfer at the time of the GWR charge you should consider the interaction with business relief (IHTM24204). The notional transfer by the donee determines the rate of relief.